10q10k10q10k.net

What changed in GYRE THERAPEUTICS, INC.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of GYRE THERAPEUTICS, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+987 added−1015 removedSource: 10-K (2026-03-13) vs 10-K (2025-03-17)

Top changes in GYRE THERAPEUTICS, INC.'s 2025 10-K

987 paragraphs added · 1015 removed · 678 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

244 edited+173 added−201 removed223 unchanged
Biggest changeAn applicant seeking approval to market and distribute a new drug in the United States must typically undertake the following: • completion of pre-clinical laboratory tests, animal studies, chemical synthesis and manufacturing and formulation studies in compliance with the FDA’s GLP, regulations; • submission to the FDA of an IND for human clinical testing, which must become effective without FDA objection before human clinical trials may begin; • approval by an independent institutional review board (“IRB”), representing each clinical site before each clinical trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with the FDA’s good clinical practice (“GCP”), regulations, to establish the safety and effectiveness of the proposed drug product for each indication for which approval is sought; • preparation and submission to the FDA of an NDA; • review of the NDA by an FDA advisory committee, where applicable; • satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the drug product, and the active pharmaceutical ingredient or ingredients thereof, are produced to assess compliance with cGMP, regulations and to assure that the facilities, methods, and controls are adequate to ensure the product’s identity, strength, quality, and purity; 24 • payment of user fees, as applicable, and securing FDA approval of the NDA; and • compliance with any post-approval requirements, such as any risk evaluation and mitigation strategy (“REMS”), or post-approval studies required by the FDA.
Biggest changeThe process required by the FDA before drug product candidates may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices (“GLP”) regulation; • submission to the FDA of an IND, which must become effective before clinical trials may begin and must be updated annually or when significant changes are made; • approval by an independent institutional review board (“IRB”), or ethics committee at each clinical site before the trial is commenced; • manufacture of the proposed drug candidate in accordance with cGMPs; • performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice (“GCP”) requirements to establish the safety and efficacy of the proposed drug product candidate for its intended purpose; • preparation of and submission to the FDA of an NDA, after completion of all pivotal clinical trials; • satisfactory completion of an FDA Advisory Committee review, if applicable; • a determination by the FDA within 60 days of its receipt of an NDA to file the application for review; 22 • satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMPs, and to assure that the facilities, methods and controls are adequate to preserve the drug product’s continued safety and efficacy, and of selected clinical investigation sites to assess compliance with GCPs; and • FDA review and approval of an NDA to permit commercial marketing of the product for particular indications for use in the United States.
Hatch-Waxman Patent Certification and the 30 Month Stay 30 Upon approval of an NDA or a supplement thereto, NDA sponsors are required to list with the FDA each patent with claims that cover the applicant’s product or a method of using the product.
Hatch-Waxman Patent Certification and the 30 Month Stay Upon approval of an NDA or a supplement thereto, NDA sponsors are required to list with the FDA each patent with claims that cover the applicant’s product or a method of using the product.
The filing of a patent infringement lawsuit within 45 days after the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit or a decision in the infringement case that is favorable to the ANDA applicant. 505(b)(2) New Drug Applications As an alternative path to FDA approval for modifications to formulations or uses of products previously approved by the FDA pursuant to an NDA, an applicant may submit an NDA under Section 505(b)(2) of the FDCA.
The filing of a patent infringement lawsuit within 45 days after the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit or a decision in the infringement case that is favorable to the ANDA applicant. 30 505(b)(2) New Drug Applications As an alternative path to FDA approval for modifications to formulations or uses of products previously approved by the FDA pursuant to an NDA, an applicant may submit an NDA under Section 505(b)(2) of the FDCA.
According to the Announcement on Adjusting Evaluation and Approval Procedures for Clinical Trials for Drugs, within 60 days after the acceptance of the application of the IND and the payment of the associated fees, the applicant may conduct clinical trials for the drug in accordance with the clinical trial protocol submitted, if the applicant has not received any negative or questioning opinion from the CDE.
According to the Announcement on Adjusting Evaluation and Approval Procedures for Clinical Trials for Drugs, within 60 days after the acceptance of the IND application and the payment of the associated fees, the applicant may conduct clinical trials for the drug in accordance with the clinical trial protocol submitted, if the applicant has not received any negative or questioning opinion from the CDE.
Type II meetings are held during the key R&D periods of drugs, and mainly include meetings before the IND application, meetings upon the completion of phase 2 trials and before the commencement of phase 3 trials, meetings before submitting a marketing application for a new drug and meetings for risk evaluation and control.
Type II meetings are held during the key R&D periods of drugs, and mainly include meetings before the IND, meetings upon the completion of phase 2 trials and before the commencement of phase 3 trials, meetings before submitting a marketing application for a new drug and meetings for risk evaluation and control.
Domain Names Domain names are protected under the Administrative Measures on Internet Domain Names promulgated by the Ministry of Industry and Information Technology (the “MIIT”) and Implementing Rules on Registration of China Country Code Top-level Domain Names issued by China Internet Network Information Center. The MIIT is the regulatory body responsible for the administration of PRC internet domain names.
Domain Names Domain names are protected under the Administrative Measures on Internet Domain Names promulgated by the Ministry of Industry and Information Technology (the “MIIT”) and Implementing Rules on Registration of China Country Code Top-level Domain Names issued by the China Internet Network Information Center. The MIIT is the regulatory body responsible for the administration of PRC internet domain names.
This renewed certificate entitled the us to enjoy a preferential income tax rate of 15% for a period of three years from 2022 to 2025 if all the criteria for HNTE status could be satisfied in the relevant year.
This renewed certificate entitled us to enjoy a preferential income tax rate of 15% for a period of three years from 2022 to 2025 if all the criteria for HNTE status could be satisfied in the relevant year.
According to the Overseas Listing Trial Measures, if an issuer of securities meets both of the following criteria, the relevant offering and/or listing shall 55 be considered as indirect overseas offering and/or listing of a PRC company: (i) 50% or more of the issuer's operating revenue, total profit, total assets or net assets, as documented in its audited consolidated financial statements for the most recent accounting year, is accounted for by PRC companies; and (ii) the primary business activities of the issuer are conducted in the PRC, or its main places of business are located in the PRC, or most members of the issuer’s management team are citizens or long-term residents of the PRC.
According to the Overseas Listing Trial Measures, if an issuer of securities meets both of the following criteria, the relevant offering and/or listing shall be considered as indirect overseas offering and/or listing of a PRC company: (i) 50% or more of the issuer's operating revenue, total profit, total assets or net assets, as documented in its audited consolidated financial statements for the most recent accounting year, is accounted for by PRC companies; and (ii) the primary business activities of the issuer are conducted in the PRC, or its main places of business are located in the PRC, or most members of the issuer’s management team are citizens or long-term residents of the PRC.
Regulations on Foreign Investment The PRC Foreign Investment Law and the Implementing Regulations for the PRC Foreign Investment Law, apply to any investment activities directly or indirectly conducted by a foreign natural person, enterprise or other organization and a foreign-invested enterprise established prior to the effective date of the Foreign Investment Law shall adjust its legal form or governance structure to comply with the provisions of the Company Law of 54 the PRC or the Partnership Enterprises Law of the PRC, as applicable and complete amendment registration before January 1, 2025.
Regulations on Foreign Investment The PRC Foreign Investment Law and the Implementing Regulations for the PRC Foreign Investment Law, apply to any investment activities directly or indirectly conducted by a foreign natural person, enterprise or other organization and a foreign-invested enterprise established prior to the effective date of the Foreign Investment Law shall adjust its legal form or governance structure to comply with the provisions of the Company Law of the PRC or the Partnership Enterprises Law of the PRC, as applicable and complete amendment registration before January 1, 2025.
Drug Manufacturing Permit 47 Under the Administrative Measures for the Supervision of Drug Manufacturing promulgated by SAMR, persons engaging in drug manufacturing activities shall be subject to approval by the provincial counterparts of the NMPA where the persons engaging in pharmaceutical manufacturing activities are located, obtain a drug manufacturing permit pursuant to these measures, comply strictly with the pharmaceutical manufacturing quality control rules and ensure that the manufacturing process complies with statutory requirements at all times.
Drug Manufacturing Permit Under the Administrative Measures for the Supervision of Drug Manufacturing promulgated by SAMR, persons engaging in drug manufacturing activities shall be subject to approval by the provincial counterparts of the NMPA where the persons engaging in pharmaceutical manufacturing activities are located, obtain a drug manufacturing permit pursuant to these measures, comply strictly with the pharmaceutical manufacturing quality control rules and ensure that the manufacturing process complies with statutory requirements at all times.
The Announcement of the State Taxation Administration on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises (“Circular 37”) purports to clarify certain issues in the implementation of the above regime, by providing, among others, the definitions of equity transfer income and tax basis, the foreign 56 exchange rate to be used in the calculation of withholding amounts and the date of occurrence of the withholding obligation.
The Announcement of the State Taxation Administration on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises (“Circular 37”) purports to clarify certain issues in the implementation of the above regime, by providing, among others, the definitions of equity transfer income and tax basis, the foreign exchange rate to be used in the calculation of withholding amounts and the date of occurrence of the withholding obligation.
We provide our employees with regular feedback and assess our employees based on their performance to determine their salary, promotion and career development. In compliance with the relevant PRC labor laws, we enter into individual employment contracts with our employees covering matters such as terms, wages, bonuses, employee benefits, workplace safety and grounds for termination.
We provide our employees with regular feedback and assess our employees based on their performance to determine their salary, promotion and career development. 39 In compliance with the relevant PRC labor laws, we enter into individual employment contracts with our employees covering matters such as terms, wages, bonuses, employee benefits, workplace safety and grounds for termination.
We select our raw material suppliers based on a variety of factors, including their economic status, capital, reputation, quality control management, production scale and technological strengths and evaluate them based on their qualification, feedback to our questionnaire and our on-site examination. Logistics and Delivery Management 40 We have entered into logistics service agreements with third parties.
We select our raw material suppliers based on a variety of factors, including their economic status, capital, reputation, quality control management, production scale and technological strengths and evaluate them based on their qualification, feedback to our questionnaire and our on-site examination. Logistics and Delivery Management We have entered into logistics service agreements with third parties.
The scope and rate of reimbursement are determined by provincial policies. 49 The major aim of the Guidance on Further Deepening the Reform of the Payment Method of Basic Medical Insurance released by the General Office of the State Council is to develop a diverse reimbursement mechanism that includes diagnosis-related groups, per-capita caps and per-bed-day caps.
The scope and rate of reimbursement are determined by provincial policies. The major aim of the Guidance on Further Deepening the Reform of the Payment Method of Basic Medical Insurance released by the General Office of the State Council is to develop a diverse reimbursement mechanism that includes diagnosis-related groups, per-capita caps and per-bed-day caps.
With respect to a circumstance where a labor relationship has already been established but no formal contract has been made, a written labor contracts must be entered into within one month from the date when the employee begins to work. In addition, wages shall not be lower than the local minimum wage standard.
With respect to a circumstance where a labor relationship has already been established but no formal contract has been made, a written labor contract must be entered into within one month from the date when the employee begins to work. In addition, wages shall not be lower than the local minimum wage standard.
Principal Regulatory Authorities The primary drug regulatory bodies in the PRC include the Standing Committee of the National People’s Congress, the State Council and several ministries and agencies under the State Council’s authority including, among others, the NMPA, the predecessor of which is the China Food and Drug Administration (“CFDA”), the National Health Commission (the “NHC”), the predecessor of which is the NHFC, and the National Healthcare Security Administration (the “NHSA”).
Principal Regulatory Authorities The primary drug regulatory bodies in the PRC include the Standing Committee of the National People’s Congress, the State Council and several ministries and agencies under the State Council’s authority including, among others, the NMPA, the predecessor of which is the China Food and Drug Administration, the National Health Commission (the “NHC”), the predecessor of which is the NHFC, and the National Healthcare Security Administration (the “NHSA”).
Leveraging our extensive knowledge and experience in clinical trials, our clinical development experts identify unique therapeutic opportunities for our drug candidates based on the differentiating properties observed in clinical trials and improve clinical plans accordingly. 39 Competition The organ fibrosis market is subject to rapid change.
Leveraging our extensive knowledge and experience in clinical trials, our clinical development experts identify unique therapeutic opportunities for our drug candidates based on the differentiating properties observed in clinical trials and improve clinical plans accordingly. Competition The organ fibrosis market is subject to rapid change.
For further details, see “— Our Operations in the PRC: Gyre Pharmaceuticals—Regulatory Requirements in the PRC—Regulations Relating to the Development, Manufacture and Sale of Pharmaceuticals— National Medical Insurance, its Reimbursement Standards and the NRDL ." Two-Invoice System On December 26, 2016, the Healthcare Reform Committee of the State Council of the PRC, the former National Health and Family Planning Commission (the “NHFC”), the National Development and Reform Commission of the PRC and other relevant PRC government authorities jointly issued the Circular on Issuing the Implementing Opinions on Carrying out the Two-Invoice System for Drug Procurement among Public Medical Institutions (for trial implementation), which provides detailed rules regarding the implementation of the Two-Invoice System at a national level.
For further details, see “—Our Operations in the PRC: Gyre Pharmaceuticals—Government Regulations in the PRC —Regulations Relating to the Development, Manufacture and Sale of Pharmaceuticals—National Medical Insurance, its Reimbursement Standards and the NRDL." Two-Invoice System On December 26, 2016, the Healthcare Reform Committee of the State Council of the PRC, the former National Health and Family Planning Commission (the “NHFC”), the National Development and Reform Commission of the PRC and other relevant PRC government authorities jointly issued the Circular on Issuing the Implementing Opinions on Carrying out the Two-Invoice System for Drug Procurement among Public Medical Institutions (for trial implementation), which provides detailed rules regarding the implementation of the Two-Invoice System at a national level.
The inner label of a drug should bear such information as the drug’s name, indication 48 or function, strength, dose and usage, production date, batch number, expiry date and drug manufacturer, and the outer label of a drug should indicate such information as the drug’s name, ingredients, description, indication or function, strength, dose and usage, adverse reaction, contraindications, precautions, storage, production date, batch number, expiry date, approval number and drug manufacturer.
The inner label of a drug should bear such information as the drug’s name, indication or function, strength, dose and usage, production date, batch number, expiry date and drug manufacturer, and the outer label of a drug should indicate such information as the drug’s name, ingredients, description, indication or function, strength, dose and usage, adverse reaction, contraindications, precautions, storage, production date, batch number, expiry date, approval number and drug manufacturer.
Employees in the United States 22 We consider our ability to recruit, retain and motivate our employees to be critical to our success. We are an equal opportunity employer and are fundamentally committed to creating and maintaining a work environment in which employees are treated with respect and dignity.
Employees in the United States We consider our ability to recruit, retain and motivate our employees to be critical to our success. We are an equal opportunity employer and are fundamentally committed to creating and maintaining a work environment in which employees are treated with respect and dignity.
Drug manufacturers and distributors must comply with the Two-Invoice System in order to engage in procurement processes with public hospitals. Regulations Relating to Work Safety The PRC Work Safety Law applies to all entities engaged in production and business activities in the PRC.
Drug manufacturers and distributors must comply with the Two-Invoice System in order to engage in procurement processes with public hospitals. 54 Regulations Relating to Work Safety The PRC Work Safety Law applies to all entities engaged in production and business activities in the PRC.
Drugs’ Registration Classification Under the Administrative Measures for Drug Registration, drugs are classified into traditional Chinese drugs, chemical drugs, biological products and others. According to the Announcement on the Issuance of the Reform Plan for the Registration Classification of Chemical Drugs, the registration classification of the chemical drugs are adjusted to five categories.
Drugs’ Registration Classification Under the Administrative Measures for Drug Registration, drugs are classified into traditional Chinese drugs, chemical drugs, biological products and others. According to the Announcement on the Issuance of the Reform Plan for the Registration Classification of Chemical Drugs, the registration classification of the chemical drugs is adjusted to five categories.
Regulations Relating to Labor Protection, Social Insurance and Housing Provident Fund Labor Protection 53 According to the PRC Labor Law, employers must develop and improve their rules and regulations in accordance with the law to ensure that workers enjoy their labor rights and perform their labor obligations.
Regulations Relating to Labor Protection, Social Insurance and Housing Provident Fund Labor Protection According to the PRC Labor Law, employers must develop and improve their rules and regulations in accordance with the law to ensure that workers enjoy their labor rights and perform their labor obligations.
When the foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with applicable FDA regulatory requirements in order to use the study as support for an IND or application for marketing approval or licensure, including that the study was conducted in accordance with GCP, including review and approval by an independent ethics committee and use of proper procedures for obtaining informed consent from subjects, and the FDA is able to validate the data from the study through an onsite inspection if the FDA deems such inspection necessary.
When the foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain FDA regulatory requirements in order to use the study as support for an IND or application for marketing approval or licensure, including that the study was conducted in accordance with GCP, including review and approval by an independent ethics committee and use of proper procedures for obtaining informed consent from subjects, and the FDA is able to validate the data from the study through an onsite inspection if the FDA deems such inspection necessary.
The time can be shortened if the FDA determines that the applicant did not pursue licensure with due diligence. The total patent term after the extension may not exceed 14 years from the date of product licensure.
The time can be shortened if the FDA determines that the applicant did not pursue licensure with due diligence. The total patent term after the extension may not exceed 14 years from the date of product approval.
Additional Regulation 35 In addition to the foregoing, state and federal laws regarding environmental protection and hazardous substances, including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business.
Additional Regulation In addition to the foregoing, state and federal laws regarding environmental protection and hazardous substances, including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business.
Pursuant to the Administrative Measures for Pollutant Discharge Permit and the Regulations on the 52 Administration of Pollutant Discharge Permit, a pollutant-discharging entity must legally obtain a pollutant discharge permit prior to discharging any pollutants, and shall discharge pollutants in compliance within the scope specified in the pollutant discharge permit.
Pursuant to the Administrative Measures for Pollutant Discharge Permit and the Regulations on the Administration of Pollutant Discharge Permit, a pollutant-discharging entity must legally obtain a pollutant discharge permit prior to discharging any pollutants, and shall discharge pollutants in compliance within the scope specified in the pollutant discharge permit.
See the section entitled “ Risk Factors—Risks Related to Our Business Operations in the PRC—Since Gyre Pharmaceuticals is a legal entity registered in Beijing, PRC, it is classified as a PRC tax resident for PRC income tax purposes by default, and such classification results in unfavorable tax consequences to Gyre Pharmaceuticals and its non-PRC shareholders .” With respect to gains realized from the sale or other disposition of the shares, there is a possibility that a PRC tax authority may impose an income tax under the indirect transfer rules set out under the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or SAT Circular 7, except that such transaction could fall under the safe harbor thereunder.
See the section entitled “ Risk Factors—Risks Related to Our Business Operations in the PRC—Since Gyre Pharmaceuticals is a legal entity registered in Beijing, PRC, it is classified as a PRC tax resident for PRC income tax purposes by default, and such classification results in unfavorable tax consequences to Gyre Pharmaceuticals and its non-PRC shareholders .” With respect to gains realized from the sale or other disposition of the shares, there is a possibility that a PRC tax authority may impose an income tax under the indirect transfer rules set out under the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises, except that such transaction could fall under the safe harbor thereunder.
Upon completion of nonclinical research, clinical trials must be conducted for the application of a new drug registration and applicants must apply for approval of IND from the NMPA, or the CDE before conducting clinical trials.
Upon completion of nonclinical research, clinical trials must be conducted for the application of a new drug registration and applicants must apply for approval of an IND from the NMPA or the CDE before conducting clinical trials.
Where the applicants plan to implement international multi-center clinical trials in the PRC, the applicants must comply with the Drug Administration Law, the 44 Implementing Regulations of the PRC Drug Administration Law and the Administrative Measures for Drug Registration.
Where the applicants plan to implement international multi-center clinical trials in the PRC, the applicants must comply with the Drug Administration Law, the Implementing Regulations of the PRC Drug Administration Law and the Administrative Measures for Drug Registration.
Market Opportunities MASH, a severe form of metabolic dysfunction-associated steatotic liver disease (“MASLD”), an umbrella of conditions caused by the build-up of extra fat in the liver that is not caused by alcohol intake, is characterized histologically by the additional presence of inflammation and hepatocellular injury, such as visible ballooning, and has a significantly worse prognosis, with the potential to progress to liver fibrosis, cirrhosis or HCC.
MASH, a severe form of metabolic dysfunction-associated steatotic liver disease (“MASLD”), an umbrella of conditions caused by the build-up of extra fat in the liver that is not caused by alcohol intake, is characterized histologically by the additional presence of inflammation and hepatocellular injury, such as visible ballooning, and has a significantly worse prognosis, with the potential to progress to liver fibrosis, cirrhosis or HCC.
This responsibility is executed through training, formulation and implementation of strategies, policies, standards and metrics, communication of environmental, health and safety policies and procedures through a team of coordinators, environmental, health and safety audits and incident response 37 planning and implementation.
This responsibility is executed through training, formulation and implementation of strategies, policies, standards and metrics, communication of environmental, health and safety policies and procedures through a team of coordinators, environmental, health and safety audits and incident response planning and implementation.
Regarding International Multi-Center Clinical Trials Pursuant to the International Multi-Center Clinical Trial Guidelines (for Trial Implementation), promulgated by the NMPA, international multi-center clinical trial applicants may simultaneously perform clinical trials in different centers using the same clinical trial protocol.
Regarding International Multi-Center Clinical Trials Pursuant to the International Multi-Center Drug Clinical Trial Guidelines (for Trial Implementation), promulgated by the NMPA, international multi-center drug clinical trial applicants may simultaneously perform clinical trials in different centers using the same clinical trial protocol.
If F351 is approved for the treatment of MASH-associated liver fibrosis, future competition could arise from five main classes of drugs aiming to reach the market in the current MASH landscape: Farnesoid X receptor agonists, fibroblast grow factor 21, thyroid hormone receptor-β agonists, glucagon-like peptide 1 (“GLP-1”) agonists, and PPAR agonists, but there are others as well.
If Hydronidone is approved for the treatment of MASH-associated liver fibrosis, future competition could arise from five main classes of drugs aiming to reach the market in the current MASH landscape: Farnesoid X receptor agonists, fibroblast grow factor 21, thyroid hormone receptor-β agonists, glucagon-like peptide 1 (“GLP-1”) agonists, and PPAR agonists, but there are others as well.
Category 1 and 2 drugs must follow the registration application procedure for 46 new drugs according to the Administrative Measures for Drug Registration; Category 3 and 4 drugs must follow the procedure for generic drugs; and Category 5 drugs must follow the application and regulation requirements for importing drugs.
Category 1 and 2 drugs must follow the registration application procedure for new drugs according to the Administrative Measures for Drug Registration; Category 3 and 4 drugs must follow the procedure for generic drugs; and Category 5 drugs must follow the application and regulation requirements for importing drugs.
Later discovery of previously unknown problems with a product, including adverse events or problems with manufacturing processes of unanticipated severity or frequency, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or 29 clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program.
If we need to find a new 42 supplier, we conduct comparative research and, after confirming, the supplier is added to our Qualified Supplier Directory to ensure product supply.
If we need to find a new supplier, we conduct comparative research and, after confirming, the supplier is added to our Qualified Supplier Directory to ensure product supply.
We implement quality management measures throughout our production process, including supplier examination, raw material inspection and testing and process control, and all products are thoroughly inspected and tested before release. Procurement Quality Control We have established internal procedures governing the selection for raw material suppliers and quality control to meet the requirements of relevant cGMP and pharmaceutical registration regulations.
We implement quality management measures throughout our production process, including supplier examination, raw material inspection and testing and process control, and all products are thoroughly inspected and tested before release. 43 Procurement Quality Control We have established internal procedures governing the selection of raw material suppliers and quality control to meet the requirements of relevant cGMP and pharmaceutical registration regulations.
Non-Clinical Research and Animal Testing 43 The State Administration for Market Regulation requires preclinical data to support registration applications for imported and domestic drugs.
Non-Clinical Research and Animal Testing The State Administration for Market Regulation requires preclinical data to support registration applications for imported and domestic drugs.
During the year ended December 31, 2024, we were not subject to any material claims, lawsuits, penalties or administrative actions relating to non-compliance with occupational health and safety laws or regulations and had not experienced any strikes, labor disputes or industrial actions which have had a material effect on our business.
During the year ended December 31, 2025, we were not subject to any material claims, lawsuits, penalties or administrative actions relating to non-compliance with occupational health and safety laws or regulations and had not experienced any strikes, labor disputes or industrial actions which have had a material effect on our business.
Renminbi is freely convertible for payments of current account items such as trade and service-related foreign exchange transactions and dividend payments, but is not freely convertible for capital expenditure items such as direct investments, loans or investments in securities outside of the PRC unless approval from the SAFE or its local counterpart is obtained in advance.
Renminbi is freely convertible for payments of current account items such as trade and service-related foreign exchange transactions and dividend payments, but is not freely convertible for capital expenditure items such as direct investments, loans or investments in securities outside of the PRC unless approval from the State Administration of Foreign Exchange (the "SAFE") or its local counterpart is obtained in advance.
The manufacturing of chemical drug substance is strictly regulated under the current regulatory framework, and the manufacturer shall obtain a pollutant discharge permit in accordance with the prescribed time limit. Hazardous Chemicals Regulations on Safety Administration of Hazardous Chemicals, provides regulatory requirements on the safe production, storage, use, operation and transportation of hazardous chemicals.
The manufacturing of chemical drug substance is strictly regulated under the current regulatory framework, and the manufacturer shall obtain a pollutant discharge permit in accordance with the prescribed time limit. Hazardous Chemicals Regulations on Safety Administration of Hazardous Chemicals provide regulatory requirements on the safe production, storage, use, operation and transportation of hazardous chemicals.
In this section, references to “we,” “our,” “us” and “our company” refer to Gyre Therapeutics, Inc. Our U.S. operations are headquartered in San Diego, CA, and primarily focus on the development and commercialization of F351 for the treatment MASH-associated liver fibrosis.
In this section, references to “we,” “our,” “us” and “our company” refer to Gyre Therapeutics, Inc. Our U.S. operations are headquartered in San Diego, CA, and primarily focus on the development and commercialization of Hydronidone for the treatment MASH-associated liver fibrosis.
As of December 31, 2024, no chemical or biological drugs treating CHB-associated liver fibrosis have been approved globally. Globally, there are currently a series of drugs that are in late-stage (Phase 2 or later) clinical trials for the treatment of liver fibrosis.
As of December 31, 2025, no chemical or biological drugs treating CHB-associated liver fibrosis have been approved globally. Globally, there are currently a series of drugs that are in late-stage (Phase 2 or later) clinical trials for the treatment of liver fibrosis.
Good Manufacturing Practices Pursuant to the Drug Administration Law, drug manufacturers shall comply with the GMP and establish a sound GMP management system, to ensure that the entire process of drug manufacturing is maintained to meet the statutory requirements and the GMP requirements enacted by the NMPA and in accordance with the Drug Administration Law.
Good Manufacturing Practices Pursuant to the Drug Administration Law, drug manufacturers shall comply with the Good Manufacturing Practice (“GMP”) and establish a sound GMP management system, to ensure that the entire process of drug manufacturing is maintained to meet the statutory requirements and the GMP requirements enacted by the NMPA and in accordance with the Drug Administration Law.
We enter into supply agreements with reference to our annual sales plan, manufacturing plan and procurement plan. Sales, Marketing and Distribution Our In-House Sales and Marketing Team As of December 31, 2024, our in-house sales and marketing team had market coverage of 30 provinces, autonomous regions and municipalities in the PRC.
We enter into supply agreements with reference to our annual sales plan, manufacturing plan and procurement plan. Sales, Marketing and Distribution Our In-House Sales and Marketing Team As of December 31, 2025, our in-house sales and marketing team had market coverage of 30 provinces, autonomous regions and municipalities in the PRC.
This abnormal liver fat contributes to the progression to MASH, a liver necro-inflammatory state, that can lead to scarring, also known as fibrosis, and, for some, can progress to cirrhosis and liver failure—cirrhosis develops in approximately 20% to 45% of patients.
This abnormal liver fat contributes to the progression to MASH, a liver necro-inflammatory state, which can lead to scarring, also known as fibrosis, and, for some, can progress to cirrhosis and liver failure—cirrhosis develops in approximately 20% to 45% of patients.
The CCPA applies to personal data of consumers, business representatives, and employees, and imposes obligations on certain businesses that do business in California, including to provide specific disclosures in privacy notices, and affords rights to California residents in relation to their personal information.
The CCPA applies to personal data of consumers, business representatives, and employees, and imposes obligations on certain businesses that do business in California, including providing specific disclosures in privacy notices, and affords rights to California residents in relation to their personal information.
As of the date of this Annual Report, we are the owner of all the patents and patent applications that are material to our business. 20 The term of individual patents depends on the legal term for patents in the jurisdictions in which they are granted.
As of the date of this Annual Report, we are the owner of all the patents and patent applications that are material to our business. 19 The term of individual patents depends on the legal term for patents in the jurisdictions in which they are granted.
The social insurance and housing provident funds for our employees have been paid in full during the years ended December 31, 2024 and 2023. We are also subject to safety laws and regulations of the PRC.
The social insurance and housing provident funds for our employees have been paid in full during the years ended December 31, 2025 and 2024. We are also subject to safety laws and regulations of the PRC.
For details, see “— Our Operations in the PRC: Gyre Pharmaceuticals—Regulatory Requirements in the PRC—Regulations Relating to the Development, Manufacture and Sale of Pharmaceuticals—Drug Distribution and Two-Invoice System ”. To comply with these relevant regulations, we primarily adopt the single-layer distribution model with distributors who directly on-sell our products to hospitals and public medical institutions.
For details, see “— Our Operations in the PRC: Gyre Pharmaceuticals—Government Regulations in the PRC —Regulations Relating to the Development, Manufacture and Sale of Pharmaceuticals—Drug Distribution and Two-Invoice System. ” To comply with these relevant regulations, we primarily adopt the single-layer distribution model with distributors who directly on-sell our products to hospitals and public medical institutions.
As of December 31, 2024, our wholly-owned subsidiary (Beijing Continent Biomedical Technology Co., Ltd., a company organized under the laws of the PRC) has obtained a business license but has no business operations.
As of December 31, 2025, our wholly-owned subsidiary (Beijing Continent Biomedical Technology Co., Ltd., a company organized under the laws of the PRC) has obtained a business license but has no business operations.
Health information falls under the CCPA’s definition of personal information where it identifies, relates to, describes, or is reasonably capable of being associated with or could reasonably be linked, directly or indirectly, with a particular consumer or household—unless it is subject to HIPAA—and is included under a new category of personal information, “sensitive personal information,” which is offered greater protection.
Health information falls under the CCPA’s definition of personal information where it identifies, relates to, describes, or is reasonably capable of being associated with or could reasonably be linked, directly or indirectly, with a particular consumer or household and is included under a new category of personal information, “sensitive personal information,” which is offered greater protection.
The PRC government started to regularly adjust the NRDL since 2017 and ETUARY successfully entered into the NRDL within the same year. The latest version of the NRDL has been implemented from January 1, 2025.
The PRC government started to regularly adjust the NRDL since 2017 and ETUARY® successfully entered into the NRDL within the same year. The latest version of the NRDL has been implemented from January 1, 2026.
Specifically, new drugs are eligible for Fast Track designation if they are intended to treat a serious or life-threatening condition and data demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied.
Specifically, new products are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and data demonstrate the potential to address unmet medical needs for the disease or condition. Fast track designation applies to the combination of the product and the specific indication for which it is being studied.
In general, our relationships with our major distributors have remained stable. 41 Product Pricing We take into account a number of factors in determining our prices, which primarily includes our R&D, production and marketing costs and expenses, the perceived value of products, our market share and the competitive landscape.
In general, our relationships with our major distributors have remained stable. Product Pricing We take into account a number of factors in determining our prices, which primarily include our R&D, production and marketing costs and expenses, the perceived value of products, our market share and the competitive landscape.
With the oversight of our management, our quality control team assesses the likelihood of such risks occurring and the estimated magnitude of any potential impact. Permits and Other Approvals As of December 31, 2024, we have received all material permissions and approvals required for our business operations.
With the oversight of our management, our quality control team assesses the likelihood of such risks occurring and the estimated magnitude of any potential impact. 40 Permits and Other Approvals As of December 31, 2025, we have received all material permissions and approvals required for our business operations.
A drug marketing authorization holder who manufactures drugs on its own shall obtain a drug production license in accordance with the Circular on Drug Marketing Authorization Holder System and entrust a qualified drug manufacturer.
A drug marketing authorization holder who manufactures drugs on its own shall obtain a drug production license in accordance with the Circular on Drug Marketing Authorization Holder System or entrust a qualified drug manufacturer.
Approval and Reform for Clinical Trials of New Drugs Under the Administrative Measures for Drug Registration, the Drug Administration Law and the Implementing Regulations of the PRC Drug Administration Law, new drug applications are subject to clinical trials.
Approval and Reform for Clinical Trials of New Drugs Under the Administrative Measures for Drug Registration, the Drug Administration Law and the Implementing Regulations of the PRC Drug Administration Law, NDAs are subject to clinical trials.
As of December 31, 2024, we have formed a labor union to represent our employees. We believe that we have maintained good working relationships with our employees.
As of December 31, 2025, we have formed a labor union to represent our employees. We believe that we have maintained good working relationships with our employees.
Although ETUARY’s (Pirfenidone) substance patent expired in August 1993, Gyre currently holds one process patent that expires in 2038. In addition, Gyre holds a family of patents for methods using Pirfenidone compositions to treat certain cytotoxic- or radiation-induced injuries, such as pneumonitis, consisting of granted patents in Canada, Europe, Japan, the PRC, and the U.S.
Although ETUARY®’s (Pirfenidone) substance patent expired in August 1993, Gyre currently holds one process patent that expires in 2038. In addition, Gyre holds a family of patents for methods using Pirfenidone compositions to treat certain cytotoxic- or radiation-induced injuries, such as pneumonitis, consisting of granted patents in Canada, Europe, Japan, China, and the U.S.
We believe the diversification and expansion of our product pipeline through both in-house R&D and external collaboration are critical to our long-term competitiveness and success. We have a dedicated in-house R&D team of 69 employees in the PRC as of December 31, 2024.
We believe the diversification and expansion of our product pipeline through both in-house R&D and external collaboration are critical to our long-term competitiveness and success. We have a dedicated in-house R&D team of 66 employees in the PRC as of December 31, 2025.
As of December 31, 2024, our in-house sales and marketing team included 368 employees, with an average of more than ten years of experience in pharmaceutical sales. Our more experienced staff also share their academic promotion networking experience on a regular basis.
As of December 31, 2025, our in-house sales and marketing team included 405 employees, with an average of more than ten years of experience in pharmaceutical sales. Our more experienced staff also share their academic promotion networking experience on a regular basis.
The Two-Invoice System prohibits the sale of drugs through a chain of distributors which will, as a result, increase the price of drugs paid by the public medical institutions. The 50 Two-Invoice System was firstly promoted in pilot areas, and has been implemented nationwide by 2018.
The Two-Invoice System Notice prohibits the sale of drugs through a chain of distributors which will, as a result, increase the price of drugs paid by the public medical institutions. The Two-Invoice System was first promoted in pilot areas and has been implemented nationwide by 2018.
The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with GMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.
The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to ensure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs.
The Good Manufacturing Practice for Drugs provided guidance for, among others, the quality management, organization and staffing, production premises and facilities, equipment, material and products, recognition and inspection, documentation maintenance, manufacture management, quality control and quality assurance, contractual manufacture and contractual inspection for the products, product delivery and recalls of a manufacturer.
The GMP for Drugs provided guidance for, among others, the quality management, organization and staffing, production premises and facilities, equipment, material and products, recognition and inspection, documentation maintenance, manufacture management, quality control and quality assurance, contractual manufacture and contractual inspection for the products, product delivery and recalls of a manufacturer.
As of December 31, 2024, we had five full-time employees in the United States. We have no collective bargaining agreements with our employees, and we have not experienced any work stoppages. We consider our relations with our employees to be good.
As of December 31, 2025, we had seven full-time employees in the United States. We have no collective bargaining agreements with our employees, and we have not experienced any work stoppages. We consider our relations with our employees to be good.
In the MASH mouse model, F351 significantly reduced the severity of fibrosis, as well as demonstrated improvements in the functional, biochemical and histopathological attributes of the affected liver tissue, including a significant reduction of hydroxyproline content and liver enzymes (ALT), aspartate (AST), a decrease in liver fat degeneration, and decreases in the levels of several of inflammatory cytokines at doses of 3-10 mg/kg/day, as well as a decrease in the NAS score in the CCl 4 and WD-induced fibrosis and cell ballooning MASH models at doses of 15-50 mg/kg bid (HEDs of 144 – 480 mg) which are relevant to human exposure.
In the MASH mouse model, Hydronidone significantly reduced the severity of fibrosis, as well as demonstrated improvements in the functional, biochemical and histopathological attributes of the affected liver tissue, including a significant reduction of hydroxyproline content and liver enzymes (ALT), aspartate (AST), a decrease in liver fat degeneration, and decreases in the levels of several of inflammatory cytokines at doses of 3-10 mg/kg/day, as well as a decrease in the NAS score in the CCl4 and WD-induced fibrosis and cell ballooning MASH models at doses of 15-50 mg/kg bid (corresponding to estimated human equivalent doses ("HEDs") of approximately 144–480 mg) which are relevant to human exposure.
The HGR Implementation Rules have refined the Administrative Regulations 45 on Human Genetic Resources, including, but not limited to, refining the definition of “human genetic resources information”, clarifying the identification standard of “foreign entities”, adjusting the scope of collection approval, and adjusting and improving the approval procedures for international cooperative scientific research and administrative supervision rules.
The HGR Implementation Rules have refined the Administrative Regulations on Human Genetic Resources, including, but not limited to, refining the definition of “human genetic resources information,” clarifying the identification standard of “foreign entities,” adjusting the scope of collection approval, and adjusting and improving the approval procedures for international cooperative scientific research and administrative supervision rules.
We also own seven registered trademarks in Hong Kong, one international trademark of “ETUARY” and the trademark application of “ETUARY” in seven countries and regions including the United States, EU and Japan. As of the same date, we also hold 15 active domain names. Our Business Operations in the United States: Gyre Therapeutics, Inc.
We also own seven registered trademarks in Hong Kong, one international trademark of “ETUARY®” and the trademark application of “ETUARY®” in six countries and regions including the EU and Japan. As of the same date, we also hold 44 active domain names. Our Business Operations in the United States: Gyre Therapeutics, Inc.
The following table sets forth the details of material licenses, permits and approvals: License/Permit ​ ​ Validity Period ​ ​ Authority Drug Production License ​ ​ December 2024 – September 2025 ​ ​ Beijing Medical Products Administration Information Service Qualification Certificate ​ ​ January 2021 – January 2026 ​ ​ Beijing Medical Products Administration Zhongguancun High- tech Enterprise ​ ​ December 2022 – December 2024 ​ ​ Administrative Commission of Zhongguancun Science Park High-tech Enterprise Certificate ​ ​ November 2022 – November 2025 ​ ​ Beijing Municipal Science & Technology Commission, Beijing Municipal Finance Bureau, Beijing Municipal Administration of Taxation Drug Registration Approval (pirfenidone) ​ ​ Valid until August 2028 ​ ​ Beijing Medical Products Administration Drug Registration Approval (pirfenidone capsule) ​ ​ Valid until August 2028 ​ ​ Beijing Medical Products Administration GMP Certificate for Pharmaceutical Products (pirfenidone APIs) ​ ​ Valid until August 2028 ​ ​ Beijing Medical Products Administration Foreign Trade Operators Registration Form ​ ​ From February 2022 ​ ​ Beijing Municipal Commission of Commerce Our Research and Development We consistently devote resources to R&D to achieve long-term growth.
The following table sets forth the details of material licenses, permits and approvals: License/Permit Validity Period Authority Drug Production License August 2025 – July 2030 Beijing Medical Products Administration Registration of Network Information Service for Drugs and Medical Devices August 26, 2025 Beijing Medical Products Administration Zhongguancun High-tech Enterprise December 2024 – December 2027 Administrative Commission of Zhongguancun Science Park High-tech Enterprise Certificate October 2025 – October 2028 Beijing Municipal Science & Technology Commission, Beijing Municipal Finance Bureau, Beijing Municipal Administration of Taxation Drug Registration Approval (pirfenidone) Valid until August 2028 Beijing Medical Products Administration Drug Registration Approval (pirfenidone capsule) Valid until August 2028 Beijing Medical Products Administration GMP Certificate for Pharmaceutical Products (pirfenidone APIs) Valid until August 2028 Beijing Medical Products Administration Foreign Trade Operators Registration Form From February 2022 Beijing Municipal Commission of Commerce Our Research and Development We consistently devote resources to R&D to achieve long-term growth.
Only one patent applicable to a licensed biological product is eligible for extension and only those claims covering the product, a method for using it, or a method for manufacturing it may be 31 extended and the application for the extension must be submitted prior to the expiration of the patent in question.
Only one patent applicable to an approved drug product is eligible for extension and only those claims covering the product, a method for using it, or a method for manufacturing it may be extended and the application for the extension must be submitted prior to the expiration of the patent in question.
Our practices may not in all cases meet all the criteria for protection under a statutory exception or regulatory safe harbor.
Qualifying for a statutory exception or regulatory safe harbor requires satisfying all of the criteria for the exception or safe harbor. Our practices may not in all cases meet all of the criteria for protection under a statutory exception or regulatory safe harbor.
Production and Quality Control In-House Manufacturing Facilities Our manufacturing facilities are situated in Beijing and Cangzhou, Hebei province, in the PRC. During the years ended December 31, 2023 and 2024, 100% of pirfenidone we sold was manufactured at our Beijing and Cangzhou facilities. Our manufacturing facilities are designed and operated in compliance with cGMP regulations.
Production and Quality Control In-House Manufacturing Facilities Our manufacturing facilities are situated in Beijing and Cangzhou, Hebei province, in the PRC. During the year ended December 31, 2025, 100% of ETUARY® we sold was manufactured at our Beijing and Cangzhou facilities. Our manufacturing facilities are designed and operated in compliance with cGMP regulations.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMPs and other aspects of regulatory compliance. 28 The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
For further details about our two manufacturing centers, manufacturing capabilities 36 and processes, see “— Properties — Gyre Pharmaceuticals’ Properties ” and “— Production and Quality Control—In-House Manufacturing Facilities. ” For further details about our professional sales team and a comprehensive sales network, see “— Sales, Marketing and Distribution. ” Employees in the PRC As of December 31, 2024, we had 574 total employees, including 165 employees in Beijing, 41 employees in Cangzhou and 368 employees in other regions, which were primarily our sales and marketing employees located across the nation.
For further details about our two manufacturing centers, manufacturing capabilities and processes, see “— Properties — Gyre Pharmaceuticals’ Properties ” and “— Production and Quality Control—In-House Manufacturing Facilities. ” For further details about our professional sales team and a comprehensive sales network, see “— Sales, Marketing and Distribution. ” Employees in the PRC As of December 31, 2025, we had 618 total employees, including 172 employees in Beijing, 43 employees in Cangzhou and 403 employees in other regions, which were primarily our sales and marketing employees located across the nation.
After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.
Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. The orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.
According to the Administrative Provisions on Special Examination and Approval of the Registration of New Drugs, special examination and approval for new drugs registration applications applies when (i) the effective constituent of a drug extracted from plants, animals and minerals, as well as the preparations thereof, have never been marketed in the PRC and the material medicines and the preparations thereof are newly discovered; (ii) the chemical raw materials for medicines as well as the preparations thereof and the biological product have not been approved for marketing, either in the PRC or aboard; (iii) new drugs with distinctive clinical treatment advantages for diseases such as AIDS, malignant tumor or other rare diseases; or (iv) new drugs for diseases that currently lacking effective treatment.
With certain drugs targeting rare diseases being listed in National Rare Disease List, a company may be eligible for the priority review and approval of new drugs for these diseases from the NMPA. 50 According to the Administrative Provisions on Special Examination and Approval of the Registration of New Drugs, special examination and approval for new drugs registration applications applies when (i) the effective constituent of a drug extracted from plants, animals and minerals, as well as the preparations thereof, have never been marketed in the PRC and the material medicines and the preparations thereof are newly discovered; (ii) the chemical raw materials for medicines as well as the preparations thereof and the biological product have not been approved for marketing, either in the PRC or aboard; (iii) new drugs with distinctive clinical treatment advantages for diseases such as AIDS, malignant tumor or other rare diseases; or (iv) new drugs for diseases that currently lacking effective treatment.
Under a Fast Track designation, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable and the sponsor pays any required user fees upon submission of the first section of the application.
A fast track product may also be eligible for rolling review, where the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.
Pursuant to the Interim Measures for the Scope of Basic Medical Insurance Coverage for Drugs for Urban Employees, which set the standard for the drugs to be included in the NRDL, a drug must be clinically necessary, safe, effective, reasonably priced, easy to use, available in sufficient quantity to be included in the NRDL, and must meet one of the following requirements: (i) be set forth in the pharmacopoeia of the PRC, (ii) satisfy the standards promulgated by the NMPA and (iii) be approved by the NMPA as imported drugs.
Pursuant to the Interim Measures for the Scope of Basic Medical Insurance Coverage for Drugs for Urban Employees, which set the standard for the drugs to be included in the NRDL, a drug must be clinically necessary, safe, effective, reasonably priced, easy to use, available in sufficient quantity to be included in the NRDL, and must meet one of the following requirements: (i) be set forth in the pharmacopoeia of the PRC, (ii) satisfy the standards promulgated by the NMPA and (iii) be approved by the NMPA as imported drugs. 53 The Ministry of Labor and Social Security of the PRC, together with other government authorities, has the power to determine the drugs included in the NRDL.

… 538 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

368 edited+89 added−69 removed434 unchanged
Biggest changeIf supplies of the raw materials for our product, ETUARY, or product candidates, including ETUARY for future indications, F573, F528, and F230 in the PRC, and F351 in the PRC and potentially additional markets beyond the PRC, are significantly delayed, or if the third parties that we engage to supply any materials or to manufacture any products for our preclinical tests and clinical trials should cease to continue to do so for any reason, including due to the effects of global economic conditions, including new or increased tariffs and other barriers to trade, trade and other international disputes, inflation and fluctuating interest rates, slower growth or recession, tighter credit, volatility in financial markets, high unemployment, labor availability constraints, public health crises, significant natural disasters, including as a result of climate change, changes to fiscal and monetary policy or government budget dynamics, particularly in the pharmaceutical and biotech areas, political and military conflict, including the conflicts between Russia and Ukraine and in the Middle East, we likely would experience delays in advancing these tests and trials while we identify and qualify replacement suppliers or manufacturers and we may be unable to obtain replacement supplies on terms that are favorable to us.
Biggest changeGeopolitical events and global economic conditions, such as public health crises, the conflicts between Russia and Ukraine and in the Middle East may impact our third-party supply of the raw materials and components needed for our products, ETUARY®, Etorel® and Contiva®, and product candidates, including ETUARY® for future indications, F573, F528, and F230 in the PRC, and Hydronidone in the PRC and potentially additional markets beyond the PRC, which increases the risk that we will not have sufficient quantities of such product, generic drugs or product candidates or will not have such quantities at an acceptable cost, which will delay, prevent or impair our commercialization, marketing or development efforts, as applicable. 86 If supplies of the raw materials for our products, ETUARY®, Etorel® and Contiva®, or product candidates, including ETUARY® for future indications, F573, F528, and F230 in the PRC, and Hydronidone in the PRC and potentially additional markets beyond the PRC, are significantly delayed, or if the third parties that we engage to supply any materials or to manufacture any products for our preclinical tests and clinical trials should cease to continue to do so for any reason, including due to the effects of global economic conditions, including new or increased tariffs imposed by the U.S. government and potential retaliatory measures by foreign governments and other barriers to trade, especially in light of recent comments and executive orders made by the Trump administration, trade and other international disputes, inflation and fluctuating interest rates, slower growth or recession, tighter credit, volatility in financial markets, high unemployment, labor availability constraints, public health crises, significant natural disasters, including as a result of climate change, changes to fiscal and monetary policy or government budget dynamics, particularly in the pharmaceutical and biotech areas, government shutdowns, political and military conflict, including the conflicts between Russia and Ukraine and in the Middle East, we likely would experience delays in advancing these tests and trials while we identify and qualify replacement suppliers or manufacturers and we may be unable to obtain replacement supplies on terms that are favorable to us.
For details, see “ —In the future, the policies of centralized volume-based procurement set by the PRC government may cover our commercialized product, ETUARY, and any other future products, if approved, and the prices of such product may decrease, which in turn may have a material adverse impact on our revenue, financial condition and results of operation ” in this Risk Factors section.
For details, see “ —In the future, the policies of centralized volume-based procurement set by the PRC government may cover our commercialized product, ETUARY®, and any other future products, if approved and commercialized, and the prices of such product may decrease, which in turn may have a material adverse impact on our revenue, financial condition and results of operation ” in this Risk Factors section.
If our commercialized product, ETUARY, and any other future products, if approved, are not selected in the centralized tender process in one or more regions, our sales of the relevant product to the public hospitals in those regions may encounter difficulties, and our market share, revenues and profitability could be adversely affected.
If our commercialized products, ETUARY®, and any other future products, if approved and commercialized, are not selected in the centralized tender process in one or more regions, our sales of the relevant product to the public hospitals in those regions may encounter difficulties, and our market share, revenues and profitability could be adversely affected.
In the future, the policies of centralized volume-based procurement set by the PRC government may cover our commercialized product, ETUARY, and any other future products, if approved, and the prices of such product may decrease, which in turn may have a material adverse impact on our revenue, financial condition and results of operation.
In the future, the policies of centralized volume-based procurement set by the PRC government may cover our commercialized product, ETUARY®, and any other future products, if approved and commercialized, and the prices of such product may decrease, which in turn may have a material adverse impact on our revenue, financial condition and results of operation.
According to the Scientific Data Measures, enterprises in the PRC must seek governmental approval before any scientific data involving a state secret may be transferred abroad or to foreign parties. Upon approval by the competent authorities, the enterprise shall undergo the required procedures, and enter into the confidentiality agreements with the users of the scientific data.
According to the Scientific Data Measures, enterprises in the PRC must seek governmental approval before any scientific data involving a state secret may be transferred abroad or to foreign parties. Upon approval by the competent authorities, the enterprise shall undergo the required procedures, and enter into confidentiality agreements with the users of the scientific data.
According to the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Cybersecurity Review Measures, which are aimed at “preventing national data security risks, maintaining national security and safeguarding public interests.” Pursuant to the Revised CAC Measures, critical information infrastructure operators procuring network products and services, and online platform operators (as opposed to “data processors” in the Revised Draft CAC Measures) carrying out data processing activities which affect or may affect national security, shall conduct a cybersecurity review pursuant to the provisions therein.
According to the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Cybersecurity Review Measures, which are aimed at “preventing national data security risks, maintaining national security and safeguarding public interests.” Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators procuring network products and services, and online platform operators (as opposed to “data processors” in the Revised Draft CAC Measures) carrying out data processing activities which affect or may affect national security, shall conduct a cybersecurity review pursuant to the provisions therein.
SAFE Circular 37 further requires amendment to the registration in the event of any changes with respect to the basic information of or any significant changes with respect to the special purpose vehicle, such as an increase or decrease of capital contributed by PRC residents, share transfer or exchange, merger, division or other material events.
SAFE Circular 37 further requires amendment to the registration in the event of any changes with respect to the basic information of or any significant changes with respect to the special purpose vehicle, such as an increase or decrease in capital contributed by PRC residents, share transfer or exchange, merger, division or other material events.
Department of Health and Human Services, information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; • the Federal Food, Drug, and Cosmetic Act, which, among other things, strictly regulates drug product marketing, prohibits manufacturers from marketing drug products for off-label use and regulates the distribution of drug samples; and • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, state laws requiring pharmaceutical companies to comply with the pharmaceutical industry’s 101 voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and which may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, and state and foreign laws governing the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws such as HIPAA, thus complicating compliance efforts.
Department of Health and Human Services, information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; • the Federal Food, Drug, and Cosmetic Act, which, among other things, strictly regulates drug product marketing, prohibits manufacturers from marketing drug products for off-label use and regulates the distribution of drug samples; and • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, state laws requiring pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and which may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, and state and foreign laws governing the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws such as HIPAA, thus complicating compliance efforts.
Any completed, in-process or potential acquisition or strategic partnership may entail numerous risks, including: • inability to identify suitable acquisition targets and reach agreement on acceptable terms; • lack of access to financing for acquisitions on acceptable terms or at all, or otherwise on assumption of additional indebtedness or contingents and issuance of our equity securities; • failure to obtain or secure the governmental approvals and third-party consents necessary to consummate any proposed acquisition; • increased operating expenses, including research and development expenses due to an increased number of product candidates, administrative expenses and selling expenses; 65 • assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; • diversion of our management’s attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition; • difficulty in retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; • risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products and product candidates; • inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs; and/or • deficiencies in internal controls, data adequacy and integrity, product quality and regulatory compliance and product liabilities in the acquired business we discover after such acquisition.
Any completed, in-process or potential acquisition or strategic partnership may entail numerous risks, including: • inability to identify suitable acquisition targets and reach agreement on acceptable terms; • lack of access to financing for acquisitions on acceptable terms or at all, or otherwise on assumption of additional indebtedness or contingents and issuance of our equity securities; • failure to obtain or secure the governmental approvals and third-party consents necessary to consummate any proposed acquisition; • increased operating expenses, including research and development expenses due to an increased number of product candidates, administrative expenses and selling expenses; • assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; • diversion of our management’s attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition; 75 • difficulty in retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; • risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products and product candidates; • inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs; and/or • deficiencies in internal controls, data adequacy and integrity, product quality and regulatory compliance and product liabilities in the acquired business we discover after such acquisition.
If our distributors take one or more of the following actions, our business, results of operations, prospects and reputation may be adversely affected: • failing to distribute our product, generic drugs and future products, if approved, in the manner we contemplate, impairing the effectiveness of our distribution network; • breaching the distribution agreements or our policies and measures; • failing to maintain the requisite licenses, permits or approvals or failure to comply with applicable regulatory requirements; and • violating any applicable anti-corruption, anti-bribery, competition or other laws and regulations.
If our distributors take one or more of the following actions, our business, results of operations, prospects and reputation may be adversely affected: • failing to distribute our product, generic drugs and future products, if approved and commercialized, in the manner we contemplate, impairing the effectiveness of our distribution network; • breaching the distribution agreements or our policies and measures; • failing to maintain the requisite licenses, permits or approvals or failure to comply with applicable regulatory requirements; and • violating any applicable anti-corruption, anti-bribery, competition or other laws and regulations.
Patient enrollment is affected by other factors including: • the severity of the disease under investigation; • the eligibility criteria for the study in question; 71 • the perceived risks and benefits of the product candidate under study; • the efforts to facilitate timely enrollment in clinical trials; • clinical trials of other product candidates in the same indication; • laboratory testing and turnaround time for samples needed for eligibility assessments; • the patient referral practices of physicians; • the ability to monitor patients adequately during and after treatment; and • the proximity and availability of clinical trial sites for prospective patients.
Patient enrollment is affected by other factors including: • the severity of the disease under investigation; • the eligibility criteria for the study in question; • the perceived risks and benefits of the product candidate under study; • the efforts to facilitate timely enrollment in clinical trials; • clinical trials of other product candidates in the same indication; • laboratory testing and turnaround time for samples needed for eligibility assessments; • the patient referral practices of physicians; • the ability to monitor patients adequately during and after treatment; and • the proximity and availability of clinical trial sites for prospective patients.
We may face adverse actions or sanctions by the CSRC or other PRC regulatory agencies if we are unable to comply with such requirements, which may result in fines and penalties, restrictions on our operations, having to delist from a stock exchange outside of China, the halting of securities offerings to foreign investors and other actions that could materially and adversely affect our operations and the interest of our investors.
We may face adverse actions or sanctions by the CSRC or other PRC regulatory agencies if we are unable to comply with such requirements, which may result in fines and penalties, restrictions on our operations, having to delist from a stock exchange outside of China, the halting of securities offerings to foreign investors and/or other actions that could materially and adversely affect our operations.
Among other things, these provisions will: 124 • continue the use of a classified board of directors such that not all members of our board of directors are elected at one time; • allow the authorized number of our directors to be changed only by resolution of our board of directors; • limit the manner in which stockholders can remove directors from our board of directors; • provide for advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and for nominations to our board of directors; • limit who may call stockholder meetings; • limit actions by our stockholders by written consent; • authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and • require the approval of the holders of at least two-thirds of the votes that all stockholders would be entitled to cast to amend or repeal certain provisions of our certificate of incorporation or bylaws.
Among other things, these provisions will: • continue the use of a classified board of directors such that not all members of our board of directors are elected at one time; • allow the authorized number of our directors to be changed only by resolution of our board of directors; • limit the manner in which stockholders can remove directors from our board of directors; 139 • provide for advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and for nominations to our board of directors; • limit who may call stockholder meetings; • limit actions by our stockholders by written consent; • authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and • require the approval of the holders of at least two-thirds of the votes that all stockholders would be entitled to cast to amend or repeal certain provisions of our certificate of incorporation or bylaws.
These sanctions could include, but are not limited to, a regulator’s refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical hold, warning or untitled letters, voluntary or mandatory product 96 recalls, product seizures, total or partial suspension of production or distribution, import alerts, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
These sanctions could include, but are not limited to, a regulator’s refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical hold, warning or untitled letters, voluntary or mandatory product recalls, product seizures, total or partial suspension of production or distribution, import alerts, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
Such factors affecting the market acceptance of a current or future approved product, if any, may include: • the clinical indications for which the product is approved; • the safety and efficacy of the product; • the potential and perceived advantages and disadvantages of the product, relative to competing or alternative products or treatments; • the affordability of the product; • the cost of treatment in relation to alternative treatments and therapies; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the strength of our relationships with patient communities; • the availability of third-party coverage and adequate reimbursement; • the willingness of patients to pay out-of-pocket in the absence of coverage and adequate reimbursement by third-party payors and government authorities; • the strength of marketing and distribution support; • the prevalence and severity of any side effects; • the current diagnostic conditions of the disease for which the product is indicated, which may be influenced by the number of physicians from the relevant department and their respective experiences, available diagnostic methods and equipment therefor; and 68 • the effectiveness of our sales and marketing efforts.
Such factors affecting the market acceptance of a current or future approved product, if any, may include: • the clinical indications for which the product is approved; • the safety and efficacy of the product; • the potential and perceived advantages and disadvantages of the product, relative to competing or alternative products or treatments; • the affordability of the product; • the cost of treatment in relation to alternative treatments and therapies; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the strength of our relationships with patient communities; • the availability of third-party coverage and adequate reimbursement; 78 • the willingness of patients to pay out-of-pocket in the absence of coverage and adequate reimbursement by third-party payors and government authorities; • the strength of marketing and distribution support; • the prevalence and severity of any side effects; • the current diagnostic conditions of the disease for which the product is indicated, which may be influenced by the number of physicians from the relevant department and their respective experiences, available diagnostic methods and equipment therefor; and • the effectiveness of our sales and marketing efforts.
As a result, any reduction in sales or profit margins of ETUARY will have a material negative impact on our business and results of operations. 61 In addition, the pharmaceutical industries are characterized by rapid changes in technology, constant enhancement of industrial know-how and frequent emergence of new products, which renders our targeted markets highly competitive.
As a result, any reduction in sales or profit margins of ETUARY® will have a material negative impact on our business and results of operations. In addition, the pharmaceutical industries are characterized by rapid changes in technology, constant enhancement of industrial know-how and frequent emergence of new products, which renders our targeted markets highly competitive.
In the event such materials contain state secrets or working secrets of government agencies, PRC domestic companies shall first obtain approval from authorities, and file with the secrecy administrative department at the same level with the approving authority; in the event that such materials, if divulged, will jeopardize national security or public interest, PRC domestic companies shall comply with procedures 107 stipulated by national regulations.
In the event such materials contain state secrets or working secrets of government agencies, PRC domestic companies shall first obtain approval from authorities, and file with the secrecy administrative department at the same level with the approving authority; in the event that such materials, if divulged, will jeopardize national security or public interest, PRC domestic companies shall comply with procedures stipulated by national regulations.
Because Gyre Pharmaceuticals is a PRC tax resident by default, and if the PRC tax authorities adjust the taxable income of the transactions under SAT Circular 59 or Bulletin 7 and Bulletin 37, Gyre Pharmaceuticals’ income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on Gyre Pharmaceuticals’ financial condition and results of operations.
Because Gyre Pharmaceuticals is a PRC tax resident by default, and if the PRC tax authorities adjust the taxable income of the transactions under Circular 59 or Bulletin 7 and Bulletin 37, Gyre Pharmaceuticals’ income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on Gyre Pharmaceuticals’ financial condition and results of operations.
There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. Changes in tax laws or in their implementation may adversely affect our business and financial condition.
There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. 141 Changes in tax laws or in their implementation may adversely affect our business and financial condition.
It cannot be predicted 126 whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our stockholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our stockholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
Any strategic downward price adjustments of our existing 72 or future approved products due to market competition could have a materially adverse effect on our business and results of operations. Moreover, our marketed product ETUARY is subject to the risk of being included in the PRC’s centralized volume-based procurement scheme.
Any strategic downward price adjustments of our existing or future approved products due to market competition could have a materially adverse effect on our business and results of operations. Moreover, our marketed product, ETUARY® is subject to the risk of being included in the PRC’s centralized volume-based procurement scheme.
Conversely, as a result of the same factors, our clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any. 97 We cannot commercialize product candidates in the PRC or United States without first obtaining regulatory approval from the NMPA or the FDA, respectively.
Conversely, as a result of the same factors, our clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any. We cannot commercialize product candidates in the PRC or United States without first obtaining regulatory approval from the NMPA or the FDA, respectively.
If we are required to conduct additional preclinical studies or clinical trials of our product candidates, including of ETUARY for future indications, F573, F528, and F230 in the PRC, and F351 in the PRC and potentially additional markets beyond the PRC beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates, including ETUARY for future indications, F573, F528, and F230 in the PRC, and F351 in the PRC and potentially additional markets beyond the PRC or other testing, or if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may: • be delayed in obtaining regulatory approval from the NMPA, FDA, EMA or other regulatory authorities for our product candidates, including ETUARY for future indications, F573, F528, and F230 in the PRC, and F351 in the PRC and potentially additional markets beyond the PRC; • not obtain regulatory approval at all and lose our ability to further develop and commercialize our product candidates, including ETUARY for future indications, F573, F528, and F230 in the PRC, and F351 in the PRC and potentially additional markets beyond the PRC; • be required to conduct additional clinical trials or other testing beyond those that we currently contemplate; • obtain regulatory approval for indications or patient populations that are not as broad as intended or desired; • continue to be subject to post-marketing testing requirements from the NMPA, FDA, EMA or other regulatory authorities; • be unable to be listed in the NRDL in the PRC; or • experience having the product removed from the market after obtaining regulatory approval.
If we are required to conduct additional preclinical studies or clinical trials of our product candidates, including of ETUARY® for future indications, F573, F528, and F230 in the PRC, and Hydronidone in the PRC and potentially additional markets beyond the PRC beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates, including ETUARY® for future indications, F573, F528, and F230 in the PRC, and Hydronidone in the PRC and potentially additional markets beyond the PRC or other testing, or if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may: • be delayed in obtaining regulatory approval from the NMPA, FDA, EMA or other regulatory authorities for our product candidates, including ETUARY® for future indications, F573, F528, and F230 in the PRC, and Hydronidone in the PRC and potentially additional markets beyond the PRC; • not obtain regulatory approval at all and lose our ability to further develop and commercialize our product candidates, including ETUARY® for future indications, F573, F528, and F230 in the PRC, and Hydronidone in the PRC and potentially additional markets beyond the PRC; • be required to conduct additional clinical trials or other testing beyond those that we currently contemplate; • obtain regulatory approval for indications or patient populations that are not as broad as intended or desired; • continue to be subject to post-marketing testing requirements from the NMPA, FDA, EMA or other regulatory authorities; • be unable to be listed in the NRDL in the PRC; or • experience having the product removed from the market after obtaining regulatory approval.
In addition, macroeconomic conditions, a recession, depression 123 or other sustained adverse market event or otherwise could materially and adversely affect our business and the value of our common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies.
In addition, macroeconomic conditions, a recession, depression or other sustained adverse market event, or otherwise could materially and adversely affect our business and the value of our common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies.
In particular, several of our officers and directors are generally located in the PRC, and it will be more difficult to enforce liabilities and enforce judgments on those individuals. If we fail to maintain proper and effective internal controls over financial reporting our ability to produce accurate and timely financial statements could be impaired.
In particular, several of our officers and directors are generally located in the PRC, and it will be more difficult to enforce liabilities and enforce judgments on those individuals. 144 If we fail to maintain proper and effective internal controls over financial reporting our ability to produce accurate and timely financial statements could be impaired.
The NMPA, FDA and comparable foreign regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other data. our product candidates could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including: • the NMPA, FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; • We may be unable to demonstrate to the satisfaction of the NMPA, FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; • the results of clinical trials may not meet the level of statistical significance required by the NMPA, FDA or comparable foreign regulatory authorities for approval; serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; • We may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; the NMPA, FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • the data collected from clinical trials of our product candidates may not be acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the PRC, United States or elsewhere, and we may be required to conduct additional clinical trials; • the NMPA, FDA or the applicable foreign regulatory authority may disagree regarding the formulation, labeling and/or the specifications of our product candidates; • the NMPA, FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contracts for clinical and commercial supplies; and • the approval policies or regulations of the NMPA, FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
The NMPA, FDA and comparable foreign regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other data. our product candidates could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including: • the NMPA, FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; • We may be unable to demonstrate to the satisfaction of the NMPA, FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; • the results of clinical trials may not meet the level of statistical significance required by the NMPA, FDA or comparable foreign regulatory authorities for approval; serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; • We may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; the NMPA, FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • the data collected from clinical trials of our product candidates may not be acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the PRC, United States or elsewhere, and we may be required to conduct additional clinical trials; • the NMPA, FDA or the applicable foreign regulatory authority may disagree regarding the formulation, labeling and/or the specifications of our product candidates; • the NMPA, FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and 111 • the approval policies or regulations of the NMPA, FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
If any or all of the foregoing were to occur, our sales revenue may decrease, which in turn would have a material adverse impact on our financial condition, profitability and results of operation. The true market potential for our product and product candidates may be less than expected.
If any or all of the foregoing were to occur, our sales revenue may decrease, which in turn would have a material adverse impact on our financial condition, profitability and results of operation. 84 The true market potential for our product and product candidates may be less than expected.
The loss of the services of any of our executive officers, 89 other key employees, and our inability to find suitable replacements, or our inability to hire new clinical development and manufacturing personnel, could result in delays in product development and harm our business. We conduct our U.S. operations at our facility in San Diego, California.
The loss of the services of any of our executive officers, other key employees, and our inability to find suitable replacements, or our inability to hire new clinical development and manufacturing personnel, could result in delays in product development and harm our business. We conduct our U.S. operations at our facility in San Diego, California.
Because a considerable portion of pharmaceutical products we sell to our distributors are sold to public hospitals and other medical institutions in the PRC, we must submit bids in a centralized tender process to supply our commercialized product, ETUARY, and any other future products, if approved, to these institutions at specified prices.
Because a considerable portion of pharmaceutical products we sell to our distributors are sold to public hospitals and other medical institutions in the PRC, we must submit bids in a centralized tender process to supply our commercialized products, ETUARY®, and any other future products, if approved and commercialized, to these institutions at specified prices.
The Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37 requires residents of the PRC to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” The term “control” under SAFE Circular 37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by residents of the PRC in the offshore special purpose vehicles or PRC companies by such means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements.
The Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles (“SAFE Circular 37”) requires residents of the PRC to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” The term “control” under SAFE Circular 37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by residents of the PRC in the offshore special purpose vehicles or PRC companies by such means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements.
However, we may fail to win bids in a centralized tender process due to various factors, including reduced demand for the relevant product, noncompetitive bidding price, failure to meet certain quality requirements, or the relevant products being perceived to be less clinically effective than competing products.
We may fail to win bids in a centralized tender process due to various factors, including reduced demand for the relevant product, noncompetitive bidding price, failure to meet certain quality requirements, or the relevant products being perceived to be less clinically effective than competing products.
Moreover, if any 73 products comparable or similar to our product, generic drugs or product candidates if commercialized are included in the centralized volume-based procurement, patients’ willingness to use such products may be materially and adversely affected and we may need to change our pricing strategy.
Moreover, if any products comparable or similar to our product, generic drugs or product candidates if commercialized are included in the centralized volume-based procurement, patients’ willingness to use such products may be materially and adversely affected and we may need to change our pricing strategy.
These regulations include: • the Federal Healthcare Anti-Kickback Statute that prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid, and which will constrain our marketing practices and the marketing practices of our licensees, educational programs, pricing policies, and relationships with healthcare providers or other entities; • the federal physician self-referral prohibition, commonly known as the Stark Law, which prohibits physicians from referring Medicare or Medicaid patients to providers of “designated health services” with whom the physician or a member of the physician’s immediate family has an ownership interest or compensation arrangement, unless a statutory or regulatory exception applies; • federal false claims laws that prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other government reimbursement programs that are false or fraudulent, and which may expose entities that provide coding and billing advice to customers to potential criminal and civil penalties, including through civil whistleblower or qui tam actions, and including as a result of claims presented in violation of the Federal Healthcare Anti-Kickback Statute, the Stark Law or other healthcare-related laws, including laws enforced by the FDA; • HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services that, as amended by HITECH, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • federal physician sunshine requirements under the ACA, which requires manufacturers of approved drugs, devices, biologics and medical supplies to report annually to the U.S.
These regulations include: • the AKS that prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid, and which will constrain our marketing practices and the marketing practices of our licensees, educational programs, pricing policies, and relationships with healthcare providers or other entities; • the federal physician self-referral prohibition, commonly known as the Stark Law, which prohibits physicians from referring Medicare or Medicaid patients to providers of “designated health services” with whom the physician or a member of the physician’s immediate family has an ownership interest or compensation arrangement, unless a statutory or regulatory exception applies; • federal false claims laws that prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other government reimbursement programs that are false or fraudulent, and which may expose entities that provide coding and billing advice to customers to potential criminal and civil penalties, including through civil whistleblower or qui tam actions, and including as a result of claims presented in violation of the AKS, the Stark Law or other healthcare-related laws, including laws enforced by the FDA; 114 • HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services that, as amended by HITECH, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • federal physician sunshine requirements under the ACA, which requires manufacturers of approved drugs, devices, biologics and medical supplies to report annually to the U.S.
In addition, the synergies from our collaboration with our partners may be offset by other costs incurred during the collaboration, including increases in other expenses, operating losses or problems in the business unrelated to our collaboration. Moreover, disputes may arise between us and our current or future collaboration partners.
In addition, the synergies from our collaboration with our partners may be offset by other costs incurred during the collaboration, including increases in other expenses, operating losses or problems in the business unrelated to our collaboration. 98 Moreover, disputes may arise between us and our current or future collaboration partners.
If we or any of our CROs or investigators fail to comply with applicable GCP, the clinical data generated in our clinical trials may be deemed unreliable and the NMPA, FDA or comparable regulatory authorities may require us to perform additional clinical trials before considering whether to approve our marketing applications, which would delay the regulatory approval process. 88 If our distributors act in violation of the relevant agreements, or if sub-distributors with whom we have not entered into distribution agreements do not comply with policies and measures that our distributors agree to comply with, our business, prospects and reputation could be materially and adversely affected.
If we or any of our CROs or investigators fail to comply with applicable GCP, the clinical data generated in our clinical trials may be deemed unreliable and the NMPA, FDA or comparable regulatory authorities may require us to perform additional clinical trials before considering whether to approve our marketing applications, which would delay the regulatory approval process. 100 If our distributors act in violation of the relevant agreements, or if sub-distributors with whom we have not entered into distribution agreements do not comply with policies and measures that our distributors agree to comply with, our business, prospects and reputation could be materially and adversely affected.
If we fail to comply with our obligations under our current or future agreements, our counterparties may have the right to terminate these agreements, in which event we may not be able to develop, manufacture or market the product candidate that is covered 87 under the agreements.
If we fail to comply with our obligations under our current or future agreements, our counterparties may have the right to terminate these agreements, in which event we may not be able to develop, manufacture or market the product candidate that is covered under the agreements.
Furthermore, under the amended Individual Income Tax Law, foreign nationals who have no domicile in the PRC, but have resided in the PRC for a total of 183 days or more in a tax year, are subject to PRC individual income tax on their income gained within or outside the PRC.
Furthermore, under the PRC Individual Income Tax Law, foreign nationals who have no domicile in the PRC, but have resided in the PRC for a total of 183 days or more in a tax year, are subject to PRC individual income tax on their income gained within or outside the PRC.
The limitations of currently available intellectual property protection regimes include that: • others may be able to make products that are similar to ETUARY or our product candidates or utilize similar technologies that are not covered by our owned and licensed patents; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing, misappropriating or otherwise violating our intellectual property rights; • the proprietary technologies on which we rely may not be patentable; and • we may choose not to file a patent for certain trade secrets or know-how, yet a third party may subsequently file a patent covering such intellectual property.
The limitations of currently available intellectual property protection regimes include that: • others may be able to make products that are similar to ETUARY®, Etorel®, Contiva® or our product candidates or utilize similar technologies that are not covered by our owned and licensed patents; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing, misappropriating or otherwise violating our intellectual property rights; • the proprietary technologies on which we rely may not be patentable; and • we may choose not to file a patent for certain trade secrets or know-how, yet a third-party may subsequently file a patent covering such intellectual property.
For example, there can be no assurance that we were the first to make the inventions claimed in our patents or pending patent applications because of the delay between publications 91 of discoveries in scientific or patent literature and actual discoveries and patent applications.
For example, there can be no assurance that we were the first to make the inventions claimed in our patents or pending patent applications because of the delay between publications of discoveries in scientific or patent literature and actual discoveries and patent applications.
Our employment policies and practices may violate the labor contract law or its implementation rules, and we may thus be subject to related penalties, fines or legal fees. Compliance with the labor contract law and its implementation rules may increase our operating expenses, in particular, our personnel expenses.
Our employment policies and practices may violate the labor contract law or its implementation rules, and we may thus be subject to related penalties, fines or legal fees. 122 Compliance with the labor contract law and its implementation rules may increase our operating expenses, in particular, our personnel expenses.
PRC 121 There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the NMPA, FDA or similar regulatory authorities outside the PRC and United States.
PRC There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the NMPA, FDA or similar regulatory authorities outside the PRC and United States.
As a result, increasingly high barriers are being erected to the entry of new products. Risks Related to Our Common Stock The market price of our common stock has been, and may continue to be, volatile. 122 The market price of our common stock could be subject to significant fluctuations.
As a result, increasingly high barriers are being erected to the entry of new products. Risks Related to Our Common Stock The market price of our common stock has been, and may continue to be, volatile. The market price of our common stock could be subject to significant fluctuations.
Furthermore, if the NMPA or FDA believes that additional data is necessary to supplement our clinical study data and Phase 2 clinical trial data, then the NMPA or the FDA may require us to conduct additional trials before expanding into a broader Phase 2 clinical trial.
Furthermore, if the NMPA or FDA believes that additional data is necessary to supplement our clinical study data, Phase 2 clinical trial data and Phase 3 clinical trial data, then the NMPA or the FDA may require us to conduct additional trials before expanding into a broader Phase 2 clinical trial.
If we were to obtain approval, regulatory authorities may approve any of our product candidates, including ETUARY for future indications, F573, F528, and F230 in the PRC, and F351 in the PRC and potentially additional markets beyond the PRC, for fewer or more limited indications than we request, including failing to approve the most commercially promising indications, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.
If we were to obtain approval, regulatory authorities may approve any of our product candidates, including ETUARY® for future indications, F573, F528, and F230 in the PRC, and Hydronidone in the PRC and potentially additional markets beyond the PRC, for fewer or more limited indications than we request, including failing to approve the most commercially promising indications, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.
We may identify material weaknesses or significant deficiencies in our internal control over financial reporting in the future or fail to maintain effective internal control over financial reporting, which may 129 result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
We may identify material weaknesses or significant deficiencies in our internal control over financial reporting in the future or fail to maintain effective internal control over financial reporting, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
In addition to market competition from generic drugs and other products or therapies indicated for the same disease, many of the factors discussed in this Risk Factors section could adversely affect sales of ETUARY, including but not limited to, pricing pressures caused by government policies and inclusion or removal from the governmental medical insurance coverage, market acceptance among the medical community, disruptions in manufacturing or distribution, issues with product quality or side effects and disputes over intellectual property.
In addition to market competition from generic drugs and other products or therapies indicated for the same disease, many of the factors discussed in this Risk Factors section could adversely affect sales of ETUARY®, Etorel® and Contiva® including but not limited to, pricing pressures caused by government policies and inclusion or removal from the governmental medical insurance coverage, market acceptance among the medical community, disruptions in manufacturing or distribution, issues with product quality or side effects and disputes over intellectual property.
Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation and bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations. 125 We do not anticipate that we will pay any cash dividends in the foreseeable future.
Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation and bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations. 140 We do not anticipate that we will pay any cash dividends in the foreseeable future.
United States 100 Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval.
United States Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval.
Parties making claims against us may obtain injunctive or other equitable relief that could effectively block our ability to further develop and commercialize one or more of our product, ETUARY, and our product candidates unless we redesigned infringing products (which may be impossible) or obtained a license under the applicable patents (which may not be available on commercially reasonable terms or at all), or until such patents expire.
Parties making claims against us may obtain injunctive or other equitable relief that could effectively block our ability to further develop and commercialize one or more of our products, ETUARY®, Etorel® and Contiva®, and our product candidates unless we redesigned infringing products (which may be impossible) or obtained a license under the applicable patents (which may not be available on commercially reasonable terms or at all), or until such patents expire.
If personal data are compromised due to a material breach of our information, the market perception of the 128 effectiveness of our security measures could be harmed and our reputation and credibility could be damaged.
If personal data are compromised due to a material breach of our information, the market perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged.
During the years ended December 31, 2024 and 2023, we did not identify material inventory items requiring impairment provisioning, and we believe that maintaining appropriate levels of inventory helps us meet market demands in a timely manner. We generally purchase supplies based on our estimated demand and manufacturing capacity, and our management system covers each stage of the warehousing process.
During the years ended December 31, 2025 and 2024, we did not identify material inventory items requiring impairment provisioning, and we believe that maintaining appropriate levels of inventory helps us meet market demands in a timely manner. We generally purchase supplies based on our estimated demand and manufacturing capacity, and our management system covers each stage of the warehousing process.
We may fail to win bids to sell our commercialized product, ETUARY, and any other future products, if approved, to PRC public hospitals through the centralized tender process.
We may fail to win bids to sell our commercialized products, ETUARY®, and any other future products, if approved and commercialized, to PRC public hospitals through the centralized tender process.
The PRC tax authorities may pursue such 117 non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request Gyre Pharmaceuticals to assist in the filing.
The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request Gyre Pharmaceuticals to assist in the filing.
As a result, obtaining 120 market acceptance of, and gaining significant share of the market for, any of our product candidates that we successfully introduce to the market will pose challenges.
As a result, obtaining market acceptance of, and gaining significant share of the market for, any of our product candidates that we successfully introduce to the market will pose challenges.
We will be required to demonstrate substantial evidence through well-controlled clinical trials that our product candidates are safe and effective before we can seek marketing approvals for their commercial sale. Demonstrations of efficacy or an acceptable safety profile in our prior preclinical studies does not mean that future clinical trials will yield the same results.
We will be required to demonstrate substantial evidence through well-controlled clinical trials that our product candidates are safe and effective before we can seek marketing approvals for their commercial sale. Demonstrations of efficacy or an acceptable safety profile in our prior preclinical studies do not mean that future clinical trials will yield the same results.
When determining whether there is a “reasonable commercial purpose” of the transaction arrangement, factors to be taken into consideration include: whether the main value of the equity interest of the relevant offshore enterprise derives from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in the PRC or if its income mainly derives from the PRC; whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure; the duration of existence of the business model and organizational structure; the replicability of the transaction by direct transfer of PRC taxable assets; and the tax situation of such indirect transfer and applicable tax treaties or similar arrangements.
When determining whether there is a “reasonable commercial purpose” of the transaction arrangement, factors to be taken into consideration include: whether the main value of the equity interest of the relevant offshore enterprise derives from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in the PRC or if its income mainly derives from the PRC; whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure; the duration of existence of the business model and organizational structure; the income tax payable overseas for the transaction of indirect transfer of taxable assets in PRC; the replicability of the transaction by direct transfer of PRC taxable assets; and the tax situation of such indirect transfer and applicable tax treaties or similar arrangements.
Pursuant to the Protocol, the PCAOB shall have independent discretion to select any issuer audits for 118 inspection or investigation and has the unfettered ability to transfer information to the SEC.
Pursuant to the Protocol, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC.
If any of our major customers stop purchasing ETUARY or substantially reduce order size in the future, whether due to the termination or amendment of our contractual relationship with such customer, or due to any other reason unrelated to us, we may not be able to identify and sell ETUARY to an alternative customer in a timely manner, or at all.
If any of our major customers stop purchasing ETUARY®, Etorel® or Contiva® or substantially reduce order size in the future, whether due to the termination or amendment of our contractual relationship with such customer, or due to any other reason unrelated to us, we may not be able to identify and sell ETUARY®, Etorel® or Contiva® to an alternative customer in a timely manner, or at all.
Our anticipated development costs would likely increase if development of F351 or any future product candidate is delayed because we are required by the NMPA, FDA or other comparable regulatory authorities to perform studies or trials in addition to, or different from, those that we currently anticipate, or make changes to ongoing or future clinical trial designs.
Our anticipated development costs would likely increase if development of Hydronidone or any future product candidate is delayed because we are required by the NMPA, FDA or other comparable regulatory authorities to perform studies or trials in addition to, or different from, those that we currently anticipate, or make changes to ongoing or future clinical trial designs.
In response to the SEC’s July 30, 2021 statement, the China Securities Regulatory Commission (“CSRC”) announced on August 1, 2021 that “[i]t is our belief that Chinese and U.S. regulators shall continue to enhance communication with the principle of mutual respect and cooperation, and properly address the issues related to the supervision of the PRC-based companies listed in the U.S. so as to form stable policy expectations and create benign rules framework for the market.” While the CSRC will continue to collaborate “closely with different stakeholders including investors, companies, and relevant authorities to further promote transparency and certainty of policies and implementing measures,” it emphasized that it “has always been open to companies’ choices to list their securities on international or domestic markets in compliance with relevant laws and regulations.” If any new legislation, executive orders, tariffs, laws and/or regulations are implemented, if existing trade agreements are renegotiated, if the U.S. or the PRC governments take retaliatory actions due to the recent 112 U.S.-PRC tension or if the PRC government exerts more oversight and control over securities offerings that are conducted in the United States, such changes could have an adverse effect on our business, financial condition and results of operations, and our ability to raise capital.
In response to the SEC’s July 30, 2021 statement, the CSRC announced on August 1, 2021 that “[i]t is our belief that Chinese and U.S. regulators shall continue to enhance communication with the principle of mutual respect and cooperation, and properly address the issues related to the supervision of the PRC-based companies listed in the U.S. so as to form stable policy expectations and create benign rules framework for the market.” While the CSRC will continue to collaborate “closely with different stakeholders including investors, companies, and relevant authorities to further promote transparency and certainty of policies and implementing measures,” it emphasized that it “has always been open to companies’ choices to list their securities on international or domestic markets in compliance with relevant laws and regulations.” 126 If any new legislation, executive orders, tariffs, laws and/or regulations are implemented, if existing trade agreements are renegotiated, if the U.S. or the PRC governments take retaliatory actions due to the recent U.S.-PRC tension or if the PRC government exerts more oversight and control over securities offerings that are conducted in the United States, such changes could have an adverse effect on our business, financial condition and results of operations, and our ability to raise capital.
If the applicant fails to report to the CNIPA for confidentiality examination, the patent right may not be granted if an application is later filed in the PRC. 93 The scope of our patent protection may be uncertain, and third-party claims of intellectual property infringement or challenging the inventorship or ownership of our patents may prevent or delay our development and commercialization efforts.
If the applicant fails to report to the CNIPA for confidentiality examination, the patent right may not be granted if an application is later filed in the PRC. 106 The scope of our patent protection may be uncertain, and third-party claims of intellectual property infringement or challenging the inventorship or ownership of our patents may prevent or delay our development and commercialization efforts.
Before obtaining regulatory approvals for the commercial sale of our product candidates, including ETUARY for future indications, F573, F528, and F230 in the PRC, and F351 in the PRC and potentially additional markets beyond the PRC, we must demonstrate through lengthy, complex and expensive preclinical studies and clinical trials that our product candidates are both safe and effective for each targeted indication.
Before obtaining regulatory approvals for the commercial sale of our product candidates, including ETUARY® for future indications, F573, F528, and F230 in the PRC, and Hydronidone in the PRC and potentially additional markets beyond the PRC, we must demonstrate through lengthy, complex and expensive preclinical studies and clinical trials that our product candidates are both safe and effective for each targeted indication.
Clinical drug development involves a lengthy and expensive process and outcomes are uncertain, and we may not successfully complete clinical trials for drugs under development, including ETUARY for future indications in the PRC, F573 in the PRC, and F351 in the PRC and in additional markets beyond the PRC, or demonstrate the safety and efficacy of our product candidates to the satisfaction of regulatory authorities.
Clinical drug development involves a lengthy and expensive process and outcomes are uncertain, and we may not successfully complete clinical trials for drugs under development, including ETUARY® for future indications in the PRC, F573 in the PRC, and Hydronidone in the PRC and in additional markets beyond the PRC, or demonstrate the safety and efficacy of our product candidates to the satisfaction of regulatory authorities.
All entities involved in the preparation of therapeutics for clinical studies or commercial sale, including us and any contract manufacturers for ETUARY and our other product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in late-stage clinical studies must be manufactured in accordance with GMP.
All entities involved in the preparation of therapeutics for clinical studies or commercial sale, including us and any contract manufacturers for ETUARY®, Etorel®, Contiva®, and our other product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in late-stage clinical studies must be manufactured in accordance with GMP.
If any of our product candidates receives marketing approval, we may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. Doctors may not accept or use ETUARY as a treatment for pneumoconiosis even if ETUARY receives marketing approval for such indication.
If any of our product candidates receives marketing approval, we may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. Doctors may not accept or use ETUARY® as a treatment for PD even if ETUARY® receives marketing approval for such indication.
The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, including ETUARY for future indications, F573, F528, and F230 in the PRC, and F351 in the PRC and potentially additional markets beyond the PRC, which would significantly harm our business, results of operations and prospects.
The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, including ETUARY® for future indications, F573, F528, and F230 in the PRC, and Hydronidone in the PRC and potentially additional markets beyond the PRC, which would significantly harm our business, results of operations and prospects.
Further, our product candidates, including ETUARY for future indications, F573, F528, and F230 in the PRC, and F351 in the PRC and potentially additional markets beyond the PRC, may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval.
Further, our product candidates, including ETUARY® for future indications, F573, F528, and F230 in the PRC, and Hydronidone in the PRC and potentially additional markets beyond the PRC, may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval.
Given that the term “state secret” is not clearly 110 defined, if and to the extent any data collected or generated in connection with our R&D of medical drug candidates are subject to the Scientific Data Measures and any subsequent laws as required by the relevant government authorities, there can be no assurance that we can always obtain relevant approvals for sending scientific data (such as the results of our pre-clinical studies or clinical trials conducted within the PRC) abroad or to our foreign partners in the PRC.
Given that the term “state secret” is not clearly defined, if and to the extent any data collected or generated in connection with our R&D of medical drug candidates are subject to the Scientific Data Measures and any subsequent laws as required by the relevant government authorities, there can be no assurance that we can always obtain relevant approvals for sending scientific data (such as the results of our preclinical studies or clinical trials conducted within the PRC) abroad or to our foreign partners in the PRC.
Our expansion could be constrained by the current and emerging number of IPF patients in the PRC, pending the approval and profitable launch of expanded applications for ETUARY for future indications in the PRC, and our other product candidates. 60 • The approval procedures of the NMPA, FDA, and comparable foreign regulatory authorities are extensive, protracted, and inherently uncertain.
Our expansion could be constrained by the current and emerging number of IPF patients in the PRC, pending the approval and profitable launch of expanded applications for ETUARY® for future indications in the PRC, and our other product candidates. 65 • The approval procedures of the NMPA, FDA, and comparable foreign regulatory authorities are extensive, protracted, and inherently uncertain.
For details of the risk associated with concentrations of credit risk that we are exposed to, see “— Our five largest customers accounted for a substantial amount of our revenue during the years ended December 31, 2024 and 2023, which subjects us to concentration risks. ” in this Risk Factors section.
For details of the risk associated with concentrations of credit risk that we are exposed to, see “— Our five largest customers accounted for a substantial amount of our revenue during the years ended December 31, 2025 and 2024, which subjects us to concentration risks. ” in this Risk Factors section.
Because we rely on a limited number of suppliers for certain of our raw materials, we may experience supply interruptions that could harm our ability to manufacture products. During the years ended December 31, 2024 and 2023, we had a small number of suppliers, with whom we believe we have stable relationships.
Because we rely on a limited number of suppliers for certain of our raw materials, we may experience supply interruptions that could harm our ability to manufacture products. During the years ended December 31, 2025 and 2024, we had a small number of suppliers, with whom we believe we have stable relationships.
If we are unable to successfully defend itself against such claims, we may, among others, be subject to product recalls, civil liability for physical injury, death or other losses caused by our product, ETUARY, and future products, if approved, criminal liability and the revocation of our business licenses.
If we are unable to successfully defend itself against such claims, we may, among others, be subject to product recalls, civil liability for physical injury, death or other losses caused by our products, ETUARY®, Etorel® and Contiva®, and future products, if approved, criminal liability and the revocation of our business licenses.
We have intangible assets primarily consisting of product development in progress, patents, technological know-how, and computer software, which accounted for a considerable portion of our total assets as of December 31, 2024 and 2023. The value of our intangible assets is based on a number of assumptions made by our management.
We have intangible assets primarily consisting of product development in progress, patents, technological know-how, and computer software, which accounted for a considerable portion of our total assets as of December 31, 2025 and 2024. The value of our intangible assets is based on a number of assumptions made by our management.
While our sales and marketing force actively works with medical professionals, hospitals, pharmacies and other medical institutions and we endeavor to inform them of the distinctive characteristics, advantages, safety and efficacy of ETUARY as compared to our competitors’ products, we may not be able to successfully enhance our product awareness.
While our sales and marketing force actively works with medical professionals, hospitals, pharmacies and other medical institutions and we endeavor to inform them of the distinctive characteristics, advantages, safety and efficacy of ETUARY®, Etorel® and Contiva® as compared to our competitors’ products, we may not be able to successfully enhance our product awareness.
There is no guarantee that the NMPA, FDA and other comparable foreign regulatory authorities will consider the data that is expected to be obtained in the planned Phase 2 trial in the United States sufficient to allow us to expand the development of F351 in a larger Phase 2 or confirmatory Phase 3 clinical trial.
There is no guarantee that the NMPA, FDA and other comparable foreign regulatory authorities will consider the data that is expected to be obtained in the planned Phase 2 trial in the United States sufficient to allow us to expand the development of Hydronidone in a larger Phase 2 or confirmatory Phase 3 clinical trial.
Further, our product, generic drugs and future products, if approved, may be perceived to cause severe side effects if other pharmaceutical companies’ products containing the same or similar active pharmaceutical ingredients, raw materials or delivery technologies as our product, generic drugs and future products, if approved, cause or are perceived to have caused severe side effects, or if regulators or international institutions determine that products containing the same or similar pharmaceutical ingredients as our product, generic drugs and future products, if approved, cause severe side effects.
Further, our product, generic drugs and future products, if approved, may be perceived to cause severe side effects if other pharmaceutical companies’ products containing the same or similar API, raw materials or delivery technologies as our product, generic drugs and future products, if approved, cause or are perceived to have caused severe side effects, or if regulators or international institutions determine that products containing the same or similar pharmaceutical ingredients as our product, generic drugs and future products, if approved, cause severe side effects.
The requirements for approval of F351 by the NMPA, FDA and comparable foreign regulatory authorities are unknown, may be difficult to predict, and may change over time, which makes it difficult to predict the timing and costs of clinical development and the likelihood of marketing approval. We are developing F351 for the treatment of liver fibrosis associated with MASH.
We are developing Hydronidone for the treatment of liver fibrosis associated with MASH. The requirements for approval of Hydronidone by the NMPA, FDA and comparable foreign regulatory authorities are unknown, may be difficult to predict, and may change over time, which makes it difficult to predict the timing and costs of clinical development and the likelihood of marketing approval.
Doctors may not accept or use F351 as a treatment for liver fibrosis even if F351 receives marketing approval. If our product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenues from or receive any return on our investment in any such product candidates.
Doctors may not accept or use Hydronidone as a treatment for liver fibrosis even if Hydronidone receives marketing approval. If our product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenues from or receive any return on our investment in any such product candidates.
In particular, if the existing and newly identified cases of IPF patients in the PRC are fewer than we expect, our growth and financial position may be negatively impacted until and if the expanded indications of ETUARY and our other product candidates such as F351 are approved and become profitable.
In particular, if the existing and newly identified cases of IPF patients in the PRC are fewer than we expect, our growth and financial position may be negatively impacted until and if the expanded indications of ETUARY® and our other product candidates such as Hydronidone are approved and become profitable.
If we are unable to do so, are delayed, face costs that are not economically feasible or cannot find a third-party manufacturer, we may not be able to produce ETUARY and our future approved product candidates, if any, in sufficient quantities to meet future demand.
If we are unable to do so, are delayed, face costs that are not economically feasible or cannot find a third-party manufacturer, we may not be able to produce ETUARY®, Etorel®, Contiva® and our future approved product candidates, if any, in sufficient quantities to meet future demand.

… 446 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed10 unchanged
Biggest changeOur Gyre Pharmaceuticals information security team, who reports to the Secretary of the General Manager at Gyre Pharmaceuticals, comprises of three employees with an average of 20 years of experience managing information technology and cyber 130 security matters.
Biggest changeOur Gyre Pharmaceuticals information security team, who reports to the Secretary of the General Manager at Gyre Pharmaceuticals, comprises of four employees with an average of 20 years of experience managing information technology and cybersecurity matters.
Additional information on cybersecurity risks we face is discussed in Part I, Item 1A, “Risk Factors,” under the heading “Breach, failure or disruption in or to our information system could compromise sensitive information related to our business and expose us to liability or reputational harm, and our ability to effectively manage our business operations could be adversely affected.” The Board of Directors, as a whole and at the committee level, has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks.
Additional information on cybersecurity risks we face is discussed in Part I, Item 1A, “Risk Factors,” under the heading “Breach, failure or disruption in or to our information system could compromise sensitive information related to our business and expose us to liability or reputational harm, and our ability to effectively manage our business operations could be adversely affected.” 146 The Board of Directors, as a whole and at the committee level, has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed3 unchanged
Biggest changeGyre Pharmaceuticals’ two production centers are in Beijing, PRC and Cangzhou, PRC. Leased Properties Gyre Pharmaceuticals leases 22 properties in the PRC. Among Gyre Pharmaceuticals’ 22 leased properties, 10 are used as offices, and 12 are used as employee dormitories.
Biggest changeGyre Pharmaceuticals’ two production centers are in Beijing, PRC and Cangzhou, PRC. Leased Properties Gyre Pharmaceuticals leases 26 properties in the PRC. Among Gyre Pharmaceuticals’ 26 leased properties, 11 are used as offices, and 15 are used as employee dormitories.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeRegardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors, and there can be no assurances that favorable outcomes will be obtained. Item 4. MINE SAFETY DISCLOSURES. Not applicable. 131 PART II
Biggest changeRegardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors, and there can be no assurances that favorable outcomes will be obtained. Item 4. MINE SAFETY DISCLOSURES. Not applicable. 147 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−2 removed2 unchanged
Biggest changeOn August 26, 2024, we distributed approximately $12.6 million (or $0.40 per contingent value right) to the CVR Holders. We currently intend to retain all future earnings, if any, for use in our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Biggest changeDividend Policy We currently intend to retain all future earnings, if any, for use in our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PUR CHASES OF EQUITY SECURITIES. Market Information for Common Stock Gyre Therapeutics, Inc. is listed on the Nasdaq Capital Market under the symbol “GYRE.” Holders of Common Stock As of March 7, 2025, there were approximately 44 stockholders of record of our common stock.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PUR CHASES OF EQUITY SECURITIES. Market Information for Common Stock Gyre Therapeutics, Inc. is listed on the Nasdaq Capital Market under the symbol “GYRE.” Holders of Common Stock As of March 2, 2026, there were approximately 45 stockholders of record of our common stock.
Removed
Dividend Policy On January 12, 2023, we paid a cash dividend of approximately $7.6 million (or $0.24 per share) to our common stockholders of record as of the close of business on January 5, 2023.
Removed
In June 2023, we distributed $3.5 million, which reflected, in connection with the Vertex Transaction, the hold-back amount received from Vertex less expenses and a reserve for potential tax liabilities, to the holders of Catalyst Common Stock as of January 5, 2023 (the “CVR Holders”).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+47 added−65 removed32 unchanged
Biggest changeResults of Operations The following table summarizes our results of operations for the years ended December 31, 2024 and 2023 (in thousands, except percentage change): Year Ended December 31, 2024 2023 Change ($) Change (%) Revenues $ 105,757 $ 113,450 $ (7,693 ) (6.8 )% Cost of revenues 3,884 4,636 (752 ) (16.2 )% Gross Profit 101,873 108,814 (6,941 ) (6.4 )% Operating expenses excluding cost of revenues: Selling and marketing 57,511 61,159 (3,648 ) (6.0 )% Research and development 12,024 13,780 (1,756 ) (12.7 )% General and administrative 16,109 14,662 1,447 9.9 % Acquired in-process research and development — 83,104 (83,104 ) ** Divestiture losses — 2,711 (2,711 ) ** Loss on disposal of property and equipment 66 628 (562 ) (89.5 )% Total operating expenses excluding cost of revenues 85,710 176,044 (90,334 ) (51.3 )% Income (loss) from operations 16,163 (67,230 ) 83,393 ** Other income (expense), net: Interest income, net 1,547 1,044 503 48.2 % Other expense, net (1,659 ) (1,518 ) (141 ) 9.3 % Change in fair value of warrant liability 7,167 (9,261 ) 16,428 ** Income (loss) before income taxes 23,218 (76,965 ) 100,183 ** Provision for income taxes (5,320 ) (8,515 ) 3,195 (37.5 )% Net income (loss) from operations 17,898 (85,480 ) 103,378 ** Net income attributable to noncontrolling interest 5,813 7,453 (1,640 ) (22.0 )% Net income (loss) attributable to common stockholders $ 12,085 $ (92,933 ) $ 105,018 ** ** Not meaningful.
Biggest changeWe will continue to evaluate the impact of the OBBBA on our 2026 and subsequent financial statements. 154 Results of Operations The following table summarizes our results of operations for the years ended December 31, 2025 and 2024 (in thousands, except percentage change): Year Ended December 31, 2025 2024 Change ($) Change (%) Revenues $ 116,588 $ 105,757 $ 10,831 10.2 % Operating expenses: Cost of Revenues 5,416 3,884 1,532 39.4 % Selling and marketing 65,179 57,511 7,668 13.3 % Research and development 13,698 12,024 1,674 13.9 % General and administrative 20,804 16,109 4,695 29.1 % Loss on disposal of property and equipment 4 66 (62 ) (93.9 )% Total operating expenses 105,101 89,594 15,507 17.3 % Income from operations 11,487 16,163 (4,676 ) (28.9 )% Other income (expense), net: Interest income, net 1,747 1,547 200 12.9 % Other expense, net (1,505 ) (1,659 ) 154 (9.3 )% Change in fair value of warrant liability 2,707 7,167 (4,460 ) (62.2 )% Income before income taxes 14,436 23,218 (8,782 ) (37.8 )% Provision for income taxes (4,556 ) (5,320 ) 764 (14.4 )% Net income from operations 9,880 17,898 (8,018 ) (44.8 )% Net income attributable to noncontrolling interest 4,853 5,813 (960 ) (16.5 )% Net income attributable to common stockholders $ 5,027 $ 12,085 $ (7,058 ) (58.4 )% Comparison of the Years Ended December 31, 2025 and 2024 Revenues Revenues for the years ended December 31, 2025 and 2024 were $116.6 million and $105.8 million, respectively.
Interest income is recognized on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset. Other (Expense) Income, Net Other income consists mostly of government grants.
Interest income is recognized on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset. 153 Other (Expense) Income, Net Other income consists mostly of government grants.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services 145 performed may vary and may result in us reporting expenses that are too high or too low in any particular period.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting expenses that are too high or too low in any particular period.
Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the 144 carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.
Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.
Valuation allowances are recorded against deferred tax assets, including net operating losses and tax credits, when it is determined it is more-likely-than-not that some or all of the tax benefits will not be realized. We account for uncertain tax positions in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes.
Valuation allowances are recorded against deferred tax assets, including net operating losses and tax credits, when it is determined it is more-likely-than-not that some or all of the tax benefits will not be realized. We account for uncertain tax positions in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification 740, Income Taxes.
Cash Flows from Investing Activities Cash used in investing activities for the year ended December 31, 2024 was $19.9 million, which consisted of $15.5 million in purchases of certificates of deposit, $2.3 million in purchases of property and equipment, $0.8 million in acquisition of intangible assets and $1.7 million paid for equity method investment, partially offset by $0.4 million of cash acquired in connection with the sale of equipment.
Cash used in investing activities for the year ended December 31, 2024 was $19.9 million, which consisted of $15.5 million in purchases of certificates of deposit, $2.3 million in purchases of property and equipment, $1.7 million paid for equity method investment and $0.8 million in acquisition of intangible assets, partially offset by $0.4 million of cash acquired in connection with the sale of equipment.
Recent Accounting Pronouncements Refer to Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations. 147
Recent Accounting Pronouncements Refer to Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations. 164
The Preferred Stock Warrants are recorded at fair value upon issuance and are subject to 146 remeasurement at the end of each reporting period.
The Preferred Stock Warrants are recorded at fair value upon issuance and are subject to remeasurement at the end of each reporting period.
A significant portion of our research and development expenses consists of pre-clinical and clinical trial costs, which involve contracts with third-party service providers such as contract research organizations. These costs are accrued based on management’s estimates of the services performed during the respective period.
A significant portion of our research and development expenses consists of preclinical and clinical trial costs, which involve contracts with third-party service providers such as contract research organizations. These costs are accrued based on management’s estimates of the services performed during the respective period.
However, we expect to continue to take advantage of the reduced reporting requirements applicable to smaller reporting companies.
We expect to continue to take advantage of the reduced reporting requirements applicable to smaller reporting companies.
For the sale of pharmaceutical products, revenue is recognized at a point in time when control of the asset is transferred to the customer, generally on completion of delivery of the pharmaceutical products. For the sales of pharmaceutical products, most of our customers are distributors. Revenue from product sales is recognized net of estimated sales discounts.
For the sale of pharmaceutical products, revenue is recognized at a point in time when control of the asset is transferred to the customer, generally on completion of delivery of the pharmaceutical products. For the sales of pharmaceutical products, most of our customers are distributors. Revenue from product sales is recognized as net of estimated rebates.
The aggregate amounts of restricted capital and statutory reserves of the relevant subsidiaries not available for distribution were $64.3 million as of December 31, 2024 and December 31, 2023. We do not expect the restrictions described above to have a material impact on our ability to meet our cash obligations.
The aggregate amounts of restricted capital and statutory reserves of the relevant subsidiaries not available for distribution were $70.1 million and $64.3 million as of December 31, 2025 and December 31, 2024. We do not expect the restrictions described above to have a material impact on our ability to meet our cash obligations.
Warrant Liability In connection with the Private Placement, we issued the Preferred Stock Warrants (see Note 3 — Fair Value Measurements and Financial Instruments to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K) which are freestanding financial instruments classified as warrant liability since the underlying securities are contingently redeemable upon the occurrence of events which are outside of our control.
See Note 10—Stock Based Compensation to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information. 163 Warrant Liability In connection with the Private Placement, we issued the Preferred Stock Warrants (see Note 3—Fair Value Measurements and Financial Instruments to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K) which are freestanding financial instruments classified as warrant liability since the underlying securities are contingently redeemable upon the occurrence of events which are outside of our control.
These discounts are estimated based on sales volumes from the preceding months and applying the discount percentages specified in each contract. The estimation process requires management judgment, particularly in determining the amount of sales discounts based on historical sales volumes and contractually agreed-upon discount percentages.
These rebates are estimated based on sales volumes from the preceding months and applying the rebate percentages specified in each contract. The estimation process requires management judgment, particularly in determining the amount of rebates based on historical sales volumes and contractually agreed-upon rebate percentages.
Cash Flows from Financing Activities Cash provided by financing activities for the year ended December 31, 2024 was $2.1 million due to $1.9 million in proceeds from the exercise of stock options and $0.8 million in proceeds from the issuance of common stock under our ATM Program with Jefferies LLC, partially offset by $0.5 million of cash used in connection with deferred financing costs.
These inflows were partially offset by $1.5 million of cash used in connection with deferred offering costs. 159 Cash provided by financing activities for the year ended December 31, 2024 was $2.1 million due to $1.9 million in proceeds from the exercise of stock options and $0.8 million in proceeds from the issuance of common stock under our ATM Program with Jefferies LLC, partially offset by $0.5 million of cash used in connection with deferred financing costs.
Provision for Income Taxes Provision for income taxes are comprised primarily of current income tax provision, mainly attributable to the profitable Gyre Pharmaceuticals operations in the PRC, and deferred income tax provision, mainly including deferred tax recognized for temporary differences in relation to research and development tax credit and net operating loss carryforwards for U.S. tax purposes, deemed income inclusions from controlled foreign corporations for U.S. tax purposes, and fixed and intangible assets, net of valuation allowances.
Provision for Income Taxes Provision for income taxes are comprised primarily of current income tax provision, mainly attributable to the profitable Gyre Pharmaceuticals operations in the PRC, and deferred income tax provision, mainly including deferred tax recognized for temporary differences in relation to research and development tax credit and net operating loss carryforwards for U.S. tax purposes, and fixed and intangible assets, net of valuation allowances.
Because we believe our non-accelerated filer status expired on December 31, 2024, we are required, pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, to include in our Annual Report on Form 10-K for the year ending December 31, 2024 an attestation report as to the effectiveness of our internal control over financial reporting that is issued by our independent registered public accounting firm.
As an accelerated filer, we are required, pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, to include in our Annual Report on Form 10-K for the year ending December 31, 2025 an attestation report as to the effectiveness of our internal control over financial reporting that is issued by our independent registered public accounting firm.
Contractual Obligations and Other Commitments Leases 143 We have entered into lease arrangements in (1) San Diego, California for our headquarters, which expires on the last day of the 38th full calendar month beginning on or after November 11, 2023, and (2) the PRC, for office and laboratory spaces through May 2027.
Leases We have entered into lease arrangements in (1) San Diego, California for our headquarters, which expires on the last day of the 38th full calendar month beginning on or after November 11, 2023, and (2) the PRC, for office spaces, through May 2027.
Contingent Value Rights Agreement Concurrent with the signing of the Business Combination Agreement on December 26, 2022, Catalyst and the Rights Agent (as defined in the CVR Agreement) executed a contingent value rights agreement (the “CVR Agreement”), as amended on March 29, 2023, pursuant to which each CVR Holder, excluding GNI Japan and GNI Hong Kong, received one contractual contingent value right (a “CVR”) issued by the Company for each share of Catalyst common stock held by such holders.
Contingent Value Rights Agreement Concurrent with the signing of the previously disclosed business combination agreement pursuant to which we acquired an indirect controlling interest in Gyre Pharmaceuticals, on December 26, 2022, the Company and the Rights Agent (as defined in the CVR Agreement) executed a contingent value rights agreement (the “CVR Agreement”), as amended on March 29, 2023, pursuant to which each CVR Holder (as defined in the CVR Agreement), excluding GNI Japan and GNI Hong Kong Limited, received one contractual contingent value right (a “CVR”) issued by the Company for each share of common stock held by such holders.
Long-Term Investment Measured Under Equity Method On June 28, 2024, Gyre Pharmaceuticals entered into a partnership agreement as a limited partner and is obligated to pay $4.2 million for an 18.93% equity interest in the partnership.
As a result, our indirect interest in Gyre Pharmaceuticals increased from 65.2% to 69.7%. Long-Term Investment Measured Under Equity Method On June 28, 2024, Gyre Pharmaceuticals entered into a partnership agreement as a limited partner and is obligated to pay $4.2 million for an 18.93% equity interest in the partnership.
(the “Jiangsu Wangao Agreement”), effective from May 7, 2024 to May 6, 2035. Pursuant to the Jiangsu Wangao Agreement, Gyre Pharmaceuticals obtained the drug registration certificate for and became the marketing authorization holder of nintedanib, a small-molecule drug for the treatment of idiopathic pulmonary fibrosis, within the PRC.
(the “Jiangsu Wangao Agreement”), effective from May 7, 2024 to May 6, 2035. Pursuant to the Jiangsu Wangao Agreement, Gyre Pharmaceuticals obtained the drug registration certificate for and became the marketing authorization holder of Etorel®, a small-molecule drug for the treatment of SSc-ILD and PF-ILD, within the PRC.
Other Income (Expense), Net Interest income increased by $0.5 million, or 48.2%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to additional investments in long-term certificates of deposit.
Other Income (Expense), Net Interest income increased by $0.2 million, or 12.9%, for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to additional investments in long-term certificates of deposit. Other expense decreased by $0.2 million, or 9.3%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
We regularly review our research and development activities based on unmet medical need and, as necessary, reallocate resources among our research and development portfolio that we believe will best support the long-term growth of our business. We do not track research and development expenses by product candidate or development phase.
We regularly review our research and development activities based on unmet medical need and, as necessary, reallocate resources among our research and development portfolio that we believe will best support the long-term growth of our business.
We cannot guarantee that a Phase 2 trial will be initiated or estimate the funding needed for such trial at this time, but may need to raise additional capital to fund this program.
We cannot guarantee that a Phase 2 trial will be initiated or estimate the funding needed for such trial at this time, but may need to raise additional capital to fund this program. In addition, we anticipate that we will incur expenses related to and in connection with the Merger.
We believe that our existing cash and cash equivalents, cash flows from operations, and access to capital markets will be sufficient to fund our operating activities and obligations for at least 12 months following the filing date of this Annual Report. 141 Future Funding Requirements We expect to use cash flows from operations to meet our current and future financial obligations, including funding our operations, and capital expenditures.
We believe that our existing cash and cash equivalents, cash flows from operations, and access to capital markets will be sufficient to fund our operating activities and obligations for at least 12 months following the filing date of this Annual Report and thereafter for the foreseeable future.
Additionally, Gyre Pharmaceuticals will bear the costs associated with relocating the production site to a designated location and will cover all expenses related to the manufacturing process. As of December 31, 2024, we had paid RMB 5.0 million, or approximately $0.7 million, based on the May 13, 2024 spot exchange rate of the first installment.
Additionally, Gyre Pharmaceuticals will bear the costs associated with relocating the production site to a designated location and will cover all expenses related to the manufacturing process. As of December 31, 2025, we had paid three installments totaling RMB 15.0 million, or approximately $2.1 million, based on the December 31, 2025 spot exchange rate.
Income Taxes We record income taxes using the liability method, under which deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
To date, we have not made any material adjustments to our prior estimates of research and development expenses. 162 Income Taxes We record income taxes using the liability method, under which deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
The total minimum payments under the Jiangsu Wangao Agreement are RMB 35.0 million, or approximately $4.8 million, based on the May 7, 2024 spot exchange rate. This includes an upfront transfer fee of RMB 15.0 million, or approximately $2.1 million, payable in three installments, and subsequent low- to mid-single-digit royalty payments over eight years following the commencement of sales.
The total minimum payments under the Jiangsu Wangao Agreement are RMB 35.0 million, or approximately $5.0 million, based on the December 31, 2025 spot exchange rate. This includes an upfront transfer fee of RMB 15.0 million, or approximately $2.1 million, payable in three installments, and subsequent payments based on annual sales over eight years following the commencement of commercial sales.
The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2024 2023 Cash Flow Data: Net cash (used) provided by operating activities $ (3,641 ) $ 25,892 Net cash used in investing activities (19,884 ) (19,760 ) Net cash provided by financing activities 2,102 2,500 Effect of exchange rate changes on cash and cash equivalents (273 ) (298 ) Net change in cash and cash equivalents $ (21,696 ) $ 8,334 Cash Flows from Operating Activities 142 Cash used in operating activities for the year ended December 31, 2024 was $3.6 million, reflecting our net income of $17.9 million, offset by non-cash items of $5.9 million primarily related to the $7.2 million cash used in change in fair value of warrant liability, depreciation and amortization of $1.5 million, stock-based compensation of $0.8 million.
Future capital requirements will also depend on the extent to which we acquire or invest in additional complementary businesses, products and technologies. 158 The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2025 2024 Cash Flow Data: Net cash provided by (used in) operating activities $ 1,010 $ (3,641 ) Net cash used in investing activities (474 ) (19,884 ) Net cash provided by financing activities 24,378 2,102 Effect of exchange rate changes on cash and cash equivalents 343 (273 ) Net change in cash and cash equivalents $ 25,257 $ (21,696 ) Cash Flows from Operating Activities Cash provided by operating activities for the year ended December 31, 2025 was $1.0 million, reflecting our net income of $9.9 million and non-cash items of $6.7 million, which primarily includes $7.2 million in stock-based compensation and $2.5 million in depreciation and amortization, offset by $2.7 million related to the change in fair value of warrant liability.
Based on the aggregate market value of our common stock held by non-affiliates as of June 30, 2024, we believe we remain a smaller reporting company, but have become an “accelerated filer” as of December 31, 2024.
Based on the aggregate market value of our common stock held by non-affiliates of approximately $72.6 million as of June 30, 2025, we remain a smaller reporting company and continue to qualify as an “accelerated filer” as of December 31, 2025.
Additionally, cash provided by operating activities reflected changes in net operating assets and liabilities of $7.5 million.
Additionally, cash used in operating activities reflected changes in net operating assets and liabilities of $15.6 million.
GAAP and our discussion and analysis of our financial condition and operating results require our management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes.
Critical Accounting Policies and Estimates The preparation of the consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) and our discussion and analysis of our financial condition and operating results require our management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes.
Revenue Recognition We recognize revenue in accordance with ASC Topic 606 (“ASC 606”), Revenue from Contracts with Customers, whereby revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services.
Management believes our critical accounting policies and estimates discussed below are critical to understanding its historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. 161 Revenue Recognition We recognize revenue in accordance with ASC Topic 606 (“ASC 606”), Revenue from Contracts with Customers, whereby revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services.
Property and Equipment Our commitments related to the purchase of property and equipment contracted but not yet reflected in the consolidated financial statements were $1.4 million as of December 31, 2024 and are expected to be incurred within one year.
Property and Equipment Our commitments related to the purchase of property and equipment contracted but not yet reflected in the consolidated financial statements were $3.9 million as of December 31, 2025 and are expected to be incurred within one year. 160 Etorel® IP Rights In May 2024, Gyre Pharmaceuticals entered into an agreement with Jiangsu Wangao Pharmaceuticals Co., Ltd.
Research and development costs consist primarily of costs related to the pre-clinical and clinical development of our product candidates, which include payroll and other personnel-related expenses, laboratory supplies and reagents, contract research and development services for pre-clinical research and clinical trials, materials, and consulting costs, as well as allocations of facilities, depreciation and other overhead costs. 137 We manage our research and development expenses by identifying the research and development activities we expect to be performed during a given period and then prioritizing efforts based on anticipated probability of successful technical development and regulatory approval, market potential, available human and capital resources, scientific data and other considerations.
We manage our research and development expenses by identifying the research and development activities we expect to be performed during a given period and then prioritizing efforts based on anticipated probability of successful technical development and regulatory approval, market potential, available human and capital resources, scientific data and other considerations.
Our net income during the year ended December 31, 2024 was $17.9 million, while cash used in operating activities was $3.6 million.
Our net income during the year ended December 31, 2025 was $9.9 million, while cash provided by operating activities was $1.0 million.
The increase was primarily driven by costs associated with being a public company, including a $1.9 million increase in professional expense, a $2.1 million increase in 140 miscellaneous expenses, and a $3.0 million increase in functional and administrative department's personnel cost, offset by a $5.6 million decrease in stock-based compensation cost.
This increase was primarily driven by a $3.3 million increase in stock-based compensation expense, a $1.3 million increase in functional and administrative department's personnel expense, and a $0.9 million increase in miscellaneous expense. These cost increases were partially offset by a $0.8 million decrease in professional service expenses.
Operating Expenses Cost of Revenue Cost of revenue mainly consists of cost of sales representing direct and indirect costs incurred to bring the product to saleable condition.
Such distributors sell our products to certain outlets, including hospitals and other medical institutions, as well as pharmacies. Operating Expenses Cost of Revenue Cost of revenue mainly consists of cost of sales representing direct and indirect costs incurred to bring the product to saleable condition.
Cash provided by operating activities for the year ended December 31, 2023 was $25.9 million, reflecting our net loss of $85.5 million, offset by non-cash items of $103.9 million primarily related to the acquired IPR&D of $83.1 million in connection with the GNI USA Contributions, $9.3 million related to the change in fair value of warrant liability, stock-based compensation of $7.3 million, divestiture losses of $2.7 million, and equity loss of unconsolidated affiliates of $1.3 million.
Cash used in operating activities for the year ended December 31, 2024 was $3.6 million, reflecting our net income of $17.9 million, offset by non-cash items of $5.9 million primarily related to the $7.2 million cash used in change in fair value of warrant liability, depreciation and amortization of $1.5 million, stock-based compensation of $0.8 million.
Research and Development Expenses The table below details our costs for research and development for the years ended December 31, 2024 and 2023 (in thousands, except percentage change): Year Ended December 31, 2024 2023 Change ($) Change (%) Direct program expenses: Clinical trials $ 4,328 $ 4,228 $ 100 2.4 % Materials and utilities 2,294 2,607 (313 ) (12.0 )% Pre-clinical research 766 2,038 (1,272 ) (62.4 )% Indirect expenses: Personnel-related costs including stock-based compensation 3,253 4,092 (839 ) (20.5 )% Facilities, depreciation and other 1,383 815 568 69.7 % Total research and development expenses $ 12,024 $ 13,780 $ (1,756 ) (12.7 )% Research and development expenses decreased by $1.8 million, or 12.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Research and Development Expenses The table below details our costs for research and development for the years ended December 31, 2025 and 2024 (in thousands, except percentage change): Year Ended December 31, 2025 2024 Change ($) Change (%) Direct program expenses: Clinical trials $ 5,284 $ 4,328 $ 956 22.1 % Materials and utilities 1,729 2,294 (565 ) (24.6 )% Preclinical research 1,130 766 364 47.5 % Indirect expenses: Personnel-related costs including stock-based compensation 3,697 3,253 444 13.6 % Facilities, depreciation and other 1,858 1,383 475 34.3 % Total research and development expenses $ 13,698 $ 12,024 $ 1,674 13.9 % 156 Research and development expenses for the year ended December 31, 2025 increased by $1.7 million, or 13.9%, compared with the year ended December 31, 2024.
As of December 31, 2024, our total investment into the partnership and the carrying value of the Company’s long-term investment in this affiliate was $1.7 million and $1.6 million, respectively. Financial Operations Overview During the year ended December 31, 2024, we had a net income of $17.9 million and a net income attributable to common stockholders of $12.1 million.
Financial Operations Overview During the year ended December 31, 2025, we had net income of $9.9 million and net income attributable to common stockholders of $5.0 million. For the year ended December 31, 2024, our net income was $17.9 million and net income attributable to common stockholders was $12.1 million.
Change in Fair Value of Warrant Liability 138 In connection with the Private Placement, we issued the Preferred Stock Warrants, which are freestanding financial instruments classified as warrant liability since the underlying securities are contingently redeemable upon the occurrence of events which are outside of our control.
Change in Fair Value of Warrant Liability In connection with a private placement conducted in October 2023 with GNI USA, Inc., we issued (i) 811 shares of our Series X Convertible Preferred Stock, par value $0.001 per share (the “Convertible Preferred Stock”) and (ii) warrants to purchase up to 811 shares of Convertible Preferred Stock (the “Preferred Stock Warrants”), which are freestanding financial instruments classified as warrant liability since the underlying securities are contingently redeemable upon the occurrence of events which are outside of our control.
Cash used in investing activities for the year ended December 31, 2023 was $19.8 million, which consisted of $15.7 million in purchases of certificates of deposit, $8.5 million in purchases of property and equipment and $1.0 million paid for equity method investment, partially offset by $5.6 million of cash acquired in connection with the GNI USA Contributions.
Cash Flows from Investing Activities Cash used in investing activities for the year ended December 31, 2025 was $0.5 million, which consisted of $14.0 million in purchases of certificates of deposit, $1.2 million in purchases of property and equipment, and $0.7 million in acquisitions of intangible assets, partially offset by $15.4 million of proceeds from the maturity of certificates of deposit.
This expense was reflected in our consolidated statements of operations and comprehensive income (loss). The loss is presented net of the direct costs incurred with the transaction. Loss on Disposal of Property and Equipment The net loss on the sale and disposal of property and equipment is reflected in our consolidated statements of operations and comprehensive income (loss).
Loss on Disposal of Property and Equipment The net loss on the sale and disposal of property and equipment is reflected in our consolidated statements of operations and comprehensive income. Other Income (Expense), Net Interest Income, Net Interest income consists primarily of interest earned on our long-term certificates of deposit.
Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic, regulatory, and other factors, many of which we cannot control.
Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic, regulatory, and other factors, many of which we cannot control. In particular, pending approval of an IND submission, we expect to initiate a Phase 2 trial to evaluate Hydronidone for the treatment of MASH-associated liver fibrosis in 2026.
Change in fair value of warrant liability was a decrease of $7.2 million and an increase of $9.3 million for the years ended December 31, 2024 and 2023, respectively. The decrease is related to the remeasurement of the Preferred Stock Warrants liability.
The decrease was related to the remeasurement of the Preferred Stock Warrants liability. Provision for Income Taxes Provision for income taxes was $4.6 million and $5.3 million for the years ended December 31, 2025 and 2024, respectively.
Pursuant to the partnership agreement, Gyre Pharmaceuticals, as a limited partner, shall not participate in any activities related to the management of the investment business. However, Gyre Pharmaceuticals may appoint a member to the 136 advisory committee of the partnership.
In April 2025, a new investor joined the partnership agreement, and as a result, Gyre Pharmaceuticals’ equity interest was adjusted to 18.35%. Pursuant to the partnership agreement, Gyre Pharmaceuticals, as a limited partner, shall not participate in any activities related to the management of the investment business.
Selling and Marketing Expenses Selling and marketing expenses primarily relate to selling and marketing our product ETUARY in the PRC and consist of expenses incurred from hosting academic conferences, seminars and symposia; promotional expenses associated with market education on ETUARY for its use in hospitals; and staff costs primarily consisting of salaries and benefits for in-house marketing and promotion staff.
Cost of sales primarily consists of (i) raw material costs; (ii) staff costs for production employees, including stock-based compensation; (iii) depreciation and amortization related to property and equipment and intangible assets used in production; (iv) taxes and surcharges; (v) transportation costs; and (vi) miscellaneous other costs. 152 Selling and Marketing Expenses Selling and marketing expenses primarily relate to selling and marketing our products in the PRC and consist of expenses incurred from hosting academic conferences, seminars and symposia; promotional expenses associated with market education on our products for their use in hospitals; and staff costs primarily consisting of salaries, benefits, and stock-based compensation for in-house marketing and promotion staff.
Research and Development Programs As of December 31, 2024, we have committed to allocate $33.0 million toward future research and development activities for various programs.
As of December 31, 2025, our fixed lease payment obligations were $1.0 million, with $0.7 million payable within 12 months. Research and Development Programs As of December 31, 2025, we have committed to allocating $52.8 million toward future research and development activities for various programs.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2024, we had cash and cash equivalents of $11.8 million, short-term bank deposit of $14.9 million and long-term certificates of deposit of $24.6 million, which are available to fund operations, and an accumulated deficit of $73.5 million.
The decrease was primarily attributable to a lower profit from Gyre Pharmaceuticals' operations and impact of option exercises for the year ended December 31, 2025 compared to the year ended December 31, 2024. 157 Liquidity and Capital Resources Sources of Liquidity As of December 31, 2025, we had cash and cash equivalents of $37.1 million, short-term bank deposit of $15.4 million and long-term certificates of deposit of $23.5 million, which are available to fund operations, and an accumulated deficit of $68.4 million.
We expect to satisfy these contractual obligations and commitments through a combination of cash on hand and cash provided by operating activities. Critical Accounting Policies and Estimates The preparation of the consolidated financial statements and related disclosures in conformity with U.S.
Contractual Obligations and Other Commitments We expect to satisfy these contractual obligations and commitments through a combination of cash on hand, cash provided by operating activities, short-term deposits, and long-term certificate of deposits.
For the year ended December 31, 2023, our net loss was $85.5 million and net loss attributable to common stockholders was $92.9 million. As of December 31, 2024, we had accumulated deficit of $73.5 million and cash and cash equivalents of $11.8 million.
As of December 31, 2025, we had an accumulated deficit of $68.4 million and cash and cash equivalents of $37.1 million. As of December 31, 2024, we had an accumulated deficit of $73.5 million and cash and cash equivalents of $11.8 million.
As of December 31, 2023, we had an accumulated deficit of $85.5 million and cash and cash equivalents of $33.5 million. Components of Results of Operations Revenues Sales of Pharmaceutical Products We generate revenue primarily through sales of ETUARY and certain generic drugs in the PRC.
Components of Results of Operations Revenues Sales of Pharmaceutical Products We generate revenue primarily through sales of ETUARY®, Etorel®, Contiva® and certain generic drugs in the PRC. Distributors are our direct customers, and sales to distributors accounted for 100.0% of the revenue from each of ETUARY®, Etorel® and Contiva®.
This overall decrease was partially offset by a $0.7 million increase in research and development expense from Gyre Therapeutics due to increased consulting fees. General and Administrative Expenses General and administrative expenses increased by $1.4 million, or 9.9%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
These factors were partially offset by a $0.4 million decrease in costs related to generic drugs due to the decrease in sales. Selling and Marketing Expenses Selling and marketing expenses increased by $7.7 million, or 13.3%, for the year ended December 31, 2025 compared with the prior-year period ended December 31, 2024.
Other expenses, net increased by $0.1 million, or 9.3%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to a $1.0 million increase in loss from equity method investment, partially offset by a $0.9 million decrease in government grants.
The decrease was primarily attributable to a $0.7 million increase in government grant income, partially offset by a $0.5 million increase in donation-related expenses. Change in fair value of warrant liability decreased by $4.5 million, or 62.2%, for the years ended December 31, 2025 compared with the year ended December 31, 2024.
Food and Drug Administration for the treatment of adults with CLD-associated TP in May 2018, and its indication was subsequently expanded to include the treatment of immune thrombocytopenia in June 2019. Gyre Pharmaceuticals acquired avatrombopag under a transfer agreement with Nanjing Healthnice Pharmaceutical Technology, Co., Ltd.
Contiva® (avatrombopag maleate tablets) In June 2021, Gyre Pharmaceuticals acquired avatrombopag maleate tablets pursuant to a transfer agreement with Nanjing Healthnice Pharmaceutical Technology Co., Ltd. Avatrombopag is an oral thrombopoietin receptor agonist. In June 2024, the NMPA approved avatrombopag maleate tablets for the treatment of TP associated with CLD in adult patients undergoing elective diagnostic procedures or therapy.
Cash provided by financing activities for the year ended December 31, 2023 was $2.5 million due to the portion of proceeds from the issuance of Convertible Preferred Stock and Preferred Stock Warrants in the Private Placement received after the GNI USA Contributions.
Cash Flows from Financing Activities Cash provided by financing activities for the year ended December 31, 2025 was $24.4 million, and consisted of $23.0 million in proceeds from the issuance of 2,555,555 shares of common stock in a public offering, $2.4 million in proceeds from the exercise of stock options, and $0.5 million in proceeds from the issuance of common stock under our ATM Program with Jefferies LLC.
Pirfenidone, the first anti-fibrotic drug approved for IPF in Japan, the EU, the United States, and the PRC, is a small molecule drug that inhibits the synthesis of TGF-ß1, Tumor Necrosis Factor-α, and other fibrosis and inflammation modulators. We have obtained approval for ETUARY (pirfenidone) in the PRC for IPF.
There can be no assurances that the Merger will be successfully consummated, and the intended benefits of the Merger may not be realized. Our Commercial Portfolio ETUARY® (pirfenidone) Pirfenidone is a small-molecule anti-fibrotic therapy for the treatment of IPF. It was first approved in Japan and subsequently approved in the PRC, the EU, and the United States.
In May 2024, Gyre Pharmaceuticals executed a comprehensive agreement with Jiangsu Wangao Pharmaceuticals Co., Ltd. to acquire the commercial rights to nintedanib, a small-molecule drug for the treatment of IPF. With this acquisition, we acquired the other product approved for the treatment of IPF, which is currently approved globally for the treatment of IPF.
Etorel® (nintedanib esilate soft capsules) In May 2024, Gyre Pharmaceuticals entered into a comprehensive agreement with Jiangsu Wangao Pharmaceuticals Co., Ltd. to obtain the drug registration certificate for Etorel® (nintedanib) and become the marketing authorization holder in the PRC. Etorel® is approved as a standard-of-care therapy for IPF, SSc-ILD, and PF-ILD.
Removed
Overview We are a commercial-stage biotechnology company with a proven track record of financial success developing and commercializing small-molecule anti-inflammatory and anti-fibrotic drugs targeting organ diseases, focusing specifically on organ fibrosis. Fibrotic diseases represent a large patient population with significant unmet medical needs and involves a complex, multi-stage process with multiple pathways.
Added
Overview We are a commercial-stage biopharmaceutical company focused on the development and commercialization of small-molecule therapies for the treatment of organ fibrosis and inflammatory diseases. We operate through our majority indirectly owned subsidiary, Gyre Pharmaceuticals, in the PRC, and through our U.S. operations headquartered in San Diego, California.
Removed
While there are numerous potential targets for anti-fibrotic therapy, both established and emerging, addressing a single molecular pathway may not be sufficient to prevent, halt, or reverse fibrosis. Our strategy is to build on our success in the development and commercialization of ETUARY® (pirfenidone) to expand into new indications and advance our pipeline of innovative drug candidates.
Added
Our strategy is to leverage our established commercial portfolio to support and de-risk the advancement of late-stage product candidates, expand approved products into additional indications, and build a diversified pipeline targeting significant unmet medical needs in fibrosis and related inflammatory diseases.
Removed
Gyre Pharmaceuticals successfully advanced pirfenidone from research and development to commercialization in the PRC for the treatment of IPF. In addition to IPF, pirfenidone is undergoing one additional Phase 3 trial in the PRC for the treatment of pneumoconiosis (“PD”) to broaden its indications and market.
Added
On March 2, 2026, we entered into the Merger Agreement with Cullgen and Merger Sub, pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Cullgen, with Cullgen continuing as a wholly owned subsidiary of Gyre and the surviving corporation of the Merger.
Removed
Nintedanib is expected to provide patients with more choices and benefits, and further enhance Gyre Pharmaceuticals’ leading position in the pulmonary fibrosis market.
Added
The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.
Removed
Gyre Pharmaceutical is planning to initiate commercialization of the nintedanib product in the PRC in 2025, which is to help offset declines in ETUARY sales as a result of the fluctuations in the Chinese economy significantly affecting demand for anti-fibrosis drugs and decreasing healthcare spending generally.
Added
The consummation of the Merger is subject to certain closing conditions, including, among other things, (1) approval by the requisite Cullgen stockholders of the adoption and approval of the Merger Agreement and the transactions contemplated thereby, and (2) a filing under the HSR Act.
Removed
We believe that this launch can drive meaningful revenue growth, expand our market penetration, and enhance brand recognition within the respiratory disease space. Additionally, the commercialization of nintedanib aligns with our broader strategy of building a comprehensive pulmonary care portfolio, potentially creating opportunities for synergies with our existing and future product offerings.
Added
These approvals were obtained by different sponsors in their respective jurisdictions under separate regulatory frameworks. In the PRC, we conducted independent research and development to support our regulatory submission and received first-in-class approval in 2011 as a National Category 1.1 New Drug.
Removed
We expect to continue to invest in commercialization efforts, including market access, physician education, and patient support programs, to optimize uptake and maximize the long-term value of this product. F351, our lead development candidate in both the United States and the PRC, is a structural derivative of ETUARY (pirfenidone).
Added
We commercialized pirfenidone under the brand name ETUARY®, which was included in the NRDL in 2017 and has since maintained a leading market position. 149 In addition to IPF, we are pursuing potential label expansion into additional indications in the PRC, including PD, for which, in 2025, we completed enrollment of 272 patients in our 52-week Phase 3 trial, and RILI, including cases with or without immune-related pneumonitis, for which the NMPA approved our clinical trial application in March 2025, and we expect to initiate an adaptive Phase 2/3 study in the first half of 2026.
Removed
It is a new oral chemical entity with an anti-fibrotic, TGF-ß1-targeting mechanism of action. Studies suggest that F351 and its major metabolites have minimal drug-drug interaction risks.
Added
The addition of Etorel® to our commercial portfolio expanded treatment options for patients and strengthened Gyre’s leading position in the pulmonary fibrosis market. Commercialization of Etorel® in the PRC commenced in June 2025. On November 7, 2025, the NHSA released the Announcement of the Winning Bids for the National Centralized Drug Procurement , under which Etorel® was selected.
Removed
We are prioritizing F351 for the treatment of liver fibrosis due to the large potential addressable market and significant unmet need. 133 Gyre Pharmaceuticals has completed a Phase 2 trial of F351 in the PRC for CHB-associated liver fibrosis.
Added
As of the filing date, we are in the process of entering into procurement contracts with various participating hospitals under the National Centralized Drug Procurement program. We are currently assessing the potential impact of this development on its future operating performance.
Removed
The Phase 2 trial showed that F351 was well-tolerated without notable toxicity and patients treated showed statistically-significant improvement of liver fibrosis, with the best efficacy results achieved at 270 mg/day dosing.
Added
In January 2025, the NMPA approved an additional indication for chronic ITP. Gyre Pharmaceuticals commenced commercialization of avatrombopag under the brand name Contiva® in the PRC in March 2025. Our Product Candidate Pipeline Hydronidone Hydronidone is our lead development candidate for the treatment of liver fibrosis.
Removed
Based on these results, a confirmatory Phase 3 trial is ongoing in the PRC with a primary endpoint of the reduction of the liver fibrosis score (Ishak Scoring System) by at least one stage after taking F351 in combination with Entecavir. In October 2024, the last patient completed the 52-week pivotal Phase 3 trial.

… 91 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed5 unchanged
Biggest changeOur inability or failure to do so could harm our business, financial condition, and results of operations. 148
Biggest changeOur inability or failure to do so could harm our business, financial condition, and results of operations. 165

Other GYRE 10-K year-over-year comparisons